Arch Capital’s Estimated COVID-19 Losses During 1st Quarter Could Hit $145 Million

April 16, 2020

Arch Capital Group Ltd. said its estimated pre-tax losses for claims incurred due to the COVID-19 pandemic could reach $145 million.

Breaking down the total, Arch said COVID-19 claims across its property casualty insurance and reinsurance segments ranged from $85 million to $95 million as of March 31, 2020, net of reinsurance recoveries and reinstatement premiums.

For its mortgage segment, Arch estimated a range of pre-tax net losses of $40 million to $50 million as a result of the financial stress created by the global pandemic.

Incurred losses for the mortgage segment are largely a result of loss reserve selections being set at the higher end of Arch’s range of indications, the company said, noting that its estimates are based only on reported delinquencies as of March 31, 2020 for its U.S. primary mortgage insurance operations.

At this time, there are significant uncertainties surrounding the ultimate number of claims and scope of damage resulting from this pandemic, said Arch, explaining that its estimates across its insurance, reinsurance, and mortgage segments are based on currently available information derived from models and preliminary claims information from the company’s clients and brokers.

For the first quarter of 2020, Arch said its net investment income on the investment portfolio will be approximately $110 million to $115 million, while the total return on core investment portfolio (excluding its Watford subsidiary) is expected to be in the range of -0.65% to -0.95%.

Source: Arch Capital Group Ltd.

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