Fourth-quarter catastrophe losses are required to be manageable for the U.S. insurance industry because the impact of economic and social inflation on loss costs and pricing will stay key topics for commercial lines insurers, based on a report Friday from BofA Securities Inc., a global brand for BofA Global Research.
The Friday note added that substantial pandemic losses are not anticipated. “We do not expect material losses from the COVID-19 pandemic for P&C carriers,” BofA Securities Inc said in its Friday report.
Brokers can expect to see “solid” organic growth on an improving macroeconomic backdrop and a favorable year-over-year comparison given more limited business activities in fourth quarter this past year. Margins, however, are modeled to see “modest expansion.”
The report also noted challenges to the insurtech sector “following one fourth of stark stock underperformance.”
BofA Securities' modeled recent results for individual companies varied widely.
For Chubb Inc., “We expect $428 million in Global P&C catastrophe losses,” while American International Group Inc. is forecast to see $179 million in catastrophe losses.
Axis Capital Insurance Holdings Ltd., meanwhile, is expected to have $64 million in non-COVID catastrophe losses, and Arch Capital Ltd. $63 million in catastrophe losses.
Chubb's agreement to pay for $800 million associated with Boy Scouts of the usa abuse claims is anticipated to generate a control of $400 million “given reinsurance and reserves already set aside of these claims.” The insurer is not expected to see any further COVID-19 losses “due to an all-encompassing charge in 2Q20.”
AIG is also not forecast to determine further losses from COVID-19, as is Axis, the report said.
