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Q4 cat losses are expected to be manageable: BofA



Disaster losses in the fourth quarter are expected to be manageable for the US insurance industry as the effect of economic and social inflation on loss costs and pricing will remain key issues for commercial insurance companies, according to a report on Friday from BofA Securities Inc., a global brand for BofA Global Research

The Friday note added that significant pandemic losses are not expected. "We do not expect significant 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 improved macroeconomic background and a favorable year – Comparison over years with more limited economic activity during the fourth quarter of last year. Margins, however, are modeled to see "modest expansion."

The report also noted challenges for the insurance technology sector "after a quarter of strong stock underperformance."

BofA Securities' modeled results for individual companies varied widely. [1

9659002] For Chubb Inc. , "We expect $ 428 million in global claims for catastrophic losses," while American International Group Inc. is expected to see $ 179 million in catastrophic losses.

Axis Capital Insurance Holdings Ltd. has $ 64 million in non-covid disaster losses, and Arch Capital Ltd. $ 63 million in disaster losses.

Chubb's agreement to pay $ 800 million related to Boy Scouts of America's abuse claims is expected to generate a $ 400 million fee "for reinsurance and reserves already set aside for those claims." The insurer is not expected to see any further covid-19 losses "due to an all-inclusive fee under 2Q20."

AIG is also not expected to see any further losses from covid-19, like Axis, according to the report.


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