CNA announces second quarter 2020 net catastrophe loss estimates
CNA Financial Corporation announced that it expects to report net catastrophe losses in the second quarter of 2020 of $182 million related to COVID-19, $61 million related to civil unrest and $58 million related primarily to severe weather-related events, for a total catastrophe loss estimate of $301 million pretax.
The estimated COVID-19 losses in the second quarter of 2020 follow a detailed review and analysis of existing and potential exposures in light of current information, and represent the Company’s best estimate of its ultimate insurance losses and loss adjustment expenses, including defense costs resulting from the pandemic and the consequent economic crisis. The losses are substantially driven by healthcare professional liability with additional impacts from workers’ compensation, management liability, commercial property, trade credit, and surety. Due to the recent timing of the event, emergence pattern of claims, and long tail nature of certain exposures the losses are substantially classified as incurred but not reported (IBNR) reserves.
The COVID-19 estimate does not include the impact from lower current accident year losses associated with favorable frequency as a result of shelter in place conditions. Those benefits are modest as they only apply to a portion of the portfolio as Healthcare, Construction and property coverages have seen limited benefit.
Separately, as part of its annual review of mass tort exposures, the Company expects to recognize unfavorable prior period development of $50 million pretax, primarily due to New York reviver statute-related claims. The reserve development represents the Company’s best estimate of ultimate loss based on current information and more than offsets other favorable prior period development for the quarter.
Inclusive of these items, the Company expects to report a pretax underwriting loss for the quarter of $210 million. Including the favorable impact from limited partnerships, common stock and non-redeemable preferred stock investments and reflecting the equity market rebound during the period, the Company expects to report net income of $151 million and core income of $99 million for the quarter, subject to final quarter-end procedures.
