TransRe’s Covid-19 impacts rise 75% with property BI claims a factor

TransRe, the reinsurance arm of Alleghany Corporation, has reported a 75% increase in its loss reserves for the Covid-19 pandemic in the second-quarter of the year, with an estimated loading for expected international property business interruption claims a factor.

After the first-quarter of 2020, TransRe’s Covid-19 pandemic losses totalled an estimated $153 million, largely across event postponement and cancellation coverage, other property coverages and some increased loss provisions for accident and health and trade credit lines.

For the second-quarter, parent Alleghany reported that its loss provisions for Covid-19 have increased by $135 million, largely from TransRe’s reinsurance business and attributable to further losses caused by event cancellation contracts, as well as an estimate of losses for international property business interruption claims.

TransRe’s share of Alleghany’s Covid-19 losses were $115 million for the second-quarter of 2020 and so $268 million for the first-half, meaning the reinsurance unit took all of Alleghany’s $153 million for Q1.

TransRe utilises third-party capital from investors and ILS funds to support its retrocession needs through the Pangaea collateralised sidecar series and other arrangements, with quota shares a significant portion of its capital markets backed protection.

As a result, there is a chance that investors supporting the Pangaea sidecar series, or other private proportional reinsurance and retro deals, could take a share of TransRe’s pandemic losses, particularly on the property-related business interruption side.

Weston Hicks, President and chief executive officer of Alleghany said that, Covid-19 exposure aside, TransRe’s performance was good and that the units “net premiums written grew 6% in the quarter as TransRe benefited from an improving domestic insurance market and, to a lesser degree, peak zone catastrophe pricing.”

TransRe’s reported combined ratios for Q2 and the first six months of 2020 were 102.9% and 104.9%, respectively, as significant catastrophe losses, primarily related to the pandemic, drove the unit to an underwriting loss for these periods.

Alleghany noted that TransRe’s loss provisions for the pandemic “do not account for legislative, judicial or regulatory actions that could mandate or expand coverage.”

View a running total ($23.3bn) of insurer and reinsurer Covid-19 loss disclosures over at our sister site Reinsurance News.