COVID losses similar to a moderate sized cat loss: Liberty Mutual

29-04-2020

Liberty Mutual Holding Company expects its COVID-19 related losses to be “similar to those we have experienced for a moderately sized catastrophe loss.”

Ahead of the official publication of its Q1 results, Liberty Mutual said it expects to announce net written premiums of approximately $10 billion in Q1. While the impact of COVID-19 was muted in Q1, it will likely have a bigger impact in future quarters, the re/insurer warned. 

The group also expects to announce a combined ratio of approximately 97 percent, with total equity of approximately $23 billion. 

While acknowledging that the situation is still developing, David Long, Liberty Mutual’s chairman and chief executive officer, said: “The areas of our business most exposed to insurance losses related to the pandemic and resulting economic downturn include trade credit, general liability, workers compensation, and event cancellation coverage, among others.”

The larger impact on the business will come through the group’s investment portfolio, he warned, where it has already taken realised and unrealised losses due to market volatility. 

“We expect our net investment income will be dampened in the coming quarters, as well by lower valuations on our private equity investments, which are reported on a quarter lag and thus not recognised in our first quarter results,” he said. 

Long said Liberty Mutual’s liquidity position remains excellent, with access to over $6 billion in total, not including current cash on hand of $1.4 billion. 

Long said: "Our top priority as a company has been the health and well-being of our employees, customers, partners and the communities where we live and work.” 

The company will provide premium refund programmes for its personal auto and small commercial policyholders, he added. 

Liberty Mutual, David Long, COVID-19

Bermuda Re