Underwriting group Beazley has said it is expecting to take a $170 million hit from the COVID-19 pandemic, as it reported a 13% premium increase for the first three months of the year.
The firm said that it has generated $840 million in gross written premiums compared to a figure of $743 million for the corresponding period of 2019.
However, CEO Andrew Horton (pic) said the impact of the pandemic were being felt both on and off the balance sheet.
“The events seen in the first quarter of 2020 have been unprecedented,” he explained. “Covid-19 has touched every corner of the globe and the impact of this pandemic is still being assessed. In mid-March we successfully moved to remote working arrangements for all our employees and from an operational perspective there has been no material disruption to our business. We continue to monitor closely all developments relating to the coronavirus outbreak and our priorities remain the wellbeing of our colleagues and delivering an excellent service to our clients.”
Despite the move to remote working Beazley stressed business was being done.
“Our aim is to support our brokers and clients as much as possible in these challenging times – this has included extending credit terms for the payment of premiums,” it explained. “The global pandemic and expected subsequent recession has led us to review all the classes of business we underwrite.
“Some will be affected more than others. We have been communicating with our brokers any changes to our risk appetite based on our expectations for the future. There are different opportunities and potential threats emerging as we continue to underwrite in 2020, and at this stage it is difficult to determine the overall impact of these on the growth of our well-balanced book.”
Beazley said it continued to review each area of its underwriting portfolio to identify those classes that will be impacted by Covid-19 claims. At present the estimate was the total claims from Covid-19 on first party business will be $170 million net of reinsurance.
“We discussed at the full year results that we write a contingency book of event cancellation and that, within a defined risk appetite, we provided communicable disease cover,” it added. “This is covered by specific reinsurances designed for this type of exposure. The book has had a number of claims but the frequency of new notifications has been decreasing since the end of March.
“Our expectation is that the cost of Covid-19 across the political, accident and contingency division, which includes event cancellation, personal accident and accident and health, is around $70 million net of reinsurance.”
It added that its property team had also had a number of claims, mostly related to business interruption and mostly from US domiciled companies.
“The majority of our business is written on an ISO form which does not extend cover for Covid-19 but we do provide such protection on some bespoke policies and our aim is to respond quickly to these claims,” it explained.
Its marine, property and reinsurance divisions estimated Covid-19 claims received to be around $100 million net of reinsurance.
“It is too early to say what the quantum of claims within our liability classes will be as these will emerge as the impact of the pandemic is fully realised over the next one to two years,” added the firm in a statement. “We have taken a number of underwriting actions, including the changes to our risk appetite approach mentioned above, which should reduce this impact.”