Beazley sees COVID-19 insurance claims doubling to $340 mln

LONDON (Reuters) – Specialist insurer Beazley is bracing for claims linked to the novel coronavirus pandemic to double to $340 million, with almost all the estimated increase arising from events cancelled in the wake of a recent spike in infections.

“As our book of business is heavily weighted to the U.S. and UK with largest segment being conferences, our clients are still largely unable to operate as restrictions on holding events persist,” the company said in a trading statement on Tuesday.

The claims rise, which is net of reinsurance, will offset what the firm described as “improving growth prospects across our portfolios of business”, primarily driven by continuing rate improvements, with an overall rate rise of 13% at end-August.

However, the Lloyd’s of London syndicate member said the new estimate on COVID-19 claims assumes a resumption to some form of normality in the second half of 2021 and if this proves inaccurate, the company estimates a further $50m of claims net of reinsurance.

“The magnitude of the increase is somewhat surprising and we believe reflects an exhaustion of the reinsurance cover,” analysts at JP Morgan said.

“We estimate the surplus capital position at year-end will now be near the bottom of the 15-25% preferred surplus range, which compares to 22% as projected at H1,” the bank said, as it forecast a $123 million fall in full-year pretax profits to a $55 million loss.

Beazley said it has considered the recent Financial Conduct Authority judgement on business interruption wording and does not expect this outcome to have a material impact on its business.

Fellow Lloyd’s syndicate member Hiscox said in April it expected to pay up to $175 million to settle claims arising from travel, events and mass gatherings cancelled in the wake of COVID-19, if disruption from the pandemic lasted more than six months.

(Reporting By Sinead Cruise, editing by Carolyn Cohn)