Arch Capital Group Ltd. Announces Updated Catastrophe Loss Estimates
14 Juillet 2020 - 10:05PM
Business Wire
- Estimated pre-tax net catastrophe losses of $205 million to
$225 million across the property casualty insurance and reinsurance
segments in the 2020 second quarter, including $170 million to $180
million for exposure to COVID-19 global pandemic claims.
- This loss estimate is in addition to the $87 million estimate
disclosed in the Company’s Quarterly Report on Form 10-Q for the
2020 first quarter.
- The loss estimate does not include any potential losses from
the mortgage insurance segment. The Company will report on the
mortgage segment results when it releases its 2020 second quarter
results.
Arch Capital Group Ltd. [NASDAQ: ACGL; “the Company”] has
established a range of pre-tax catastrophe losses of $205 million
to $225 million in the 2020 second quarter across its property
casualty insurance and reinsurance segments, net of reinsurance
recoveries and reinstatement premiums. Included in these estimates
is a range of estimates for exposure to COVID-19 global pandemic
claims of $170 million to $180 million, and a range of estimates of
$35 million to $45 million for losses related to civil unrest
claims across the U.S. and other 2020 second quarter catastrophic
events.
For clarity, the range of estimates above for exposure related
to the global pandemic is in addition to the $87 million estimate
previously disclosed by the Company in its Quarterly Report on Form
10-Q for the 2020 first quarter.
The range of estimates above is for the Company’s insurance and
reinsurance segments only. The COVID-19 pandemic leads to direct
and indirect impacts on the Company’s businesses, most notably
observed in the Company’s mortgage segment in the form of elevated
delinquency rates and potentially higher loss experience. For U.S.
primary mortgage insurance, loss reserving under GAAP is based on
reported delinquency rates. Segregating estimated losses due to the
pandemic from overall mortgage segment estimated losses would
require knowledge of the number of delinquencies specifically
attributable to COVID-19. As this exercise cannot be performed
accurately, the Company will not report COVID-19 provisions
separately from overall mortgage insurance loss provisions. The
Company will report on the mortgage segment results when it
releases 2020 second quarter results, which is currently scheduled
for July 29th after markets close.
At this time, there are significant uncertainties surrounding
the ultimate number of claims and scope of damage resulting from
the pandemic. The Company’s estimates across its insurance and
reinsurance segments are based on currently available information
derived from modeling techniques, including preliminary claims
information obtained from the Company’s clients and brokers, a
review of relevant in-force contracts with potential exposure to
the pandemic and estimates of reinsurance recoverables. These
estimates include losses only related to claims incurred as of June
30, 2020. Actual losses from these events may vary materially from
the estimates due to several factors, including the inherent
uncertainties in making such determinations and the evolving nature
of this pandemic. The loss estimates exclude the impact of the
pandemic on the operating results of Watford Holdings Ltd.
(“Watford”). Pursuant to GAAP, the Company consolidates the results
of Watford in its financial statements, although it only owns
approximately 13% of Watford’s outstanding common equity.
About Arch Capital Group Ltd.
Arch Capital Group Ltd., a Bermuda-based company with
approximately $13.1 billion in capital at March 31, 2020, provides
insurance, reinsurance and mortgage insurance on a worldwide basis
through its wholly owned subsidiaries.
Cautionary Note Regarding Forward-looking Statements
The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward−looking statements. This release or any
other written or oral statements made by or on behalf of Arch
Capital Group Ltd. and its subsidiaries may include forward−looking
statements, which reflect our current views with respect to future
events and financial performance. All statements other than
statements of historical fact included in or incorporated by
reference in this release are forward−looking statements.
Forward−looking statements can generally be identified by the
use of forward−looking terminology such as "may," "will," "expect,"
"intend," "estimate," "anticipate," "believe" or "continue" or
their negative or variations or similar terminology.
Forward−looking statements involve our current assessment of risks
and uncertainties. Actual events and results may differ materially
from those expressed or implied in these statements. A
non-exclusive list of the important factors that could cause actual
results to differ materially from those in such forward-looking
statements includes the following: adverse general economic and
market conditions; increased competition; pricing and policy term
trends; fluctuations in the actions of rating agencies and the
Company’s ability to maintain and improve its ratings; investment
performance; the loss of key personnel; the adequacy of the
Company’s loss reserves, severity and/or frequency of losses,
greater than expected loss ratios and adverse development on claim
and/or claim expense liabilities; greater frequency or severity of
unpredictable natural and man-made catastrophic events,
including pandemics such as COVID-19; the impact of acts of
terrorism and acts of war; changes in regulations and/or tax laws
in the United States or elsewhere; the Company’s ability to
successfully integrate, establish and maintain operating procedures
as well as integrate the businesses the Company has acquired or may
acquire into the existing operations; changes in accounting
principles or policies; material differences between actual and
expected assessments for guaranty funds and mandatory pooling
arrangements; availability and cost to the Company of reinsurance
to manage the Company’s gross and net exposures; the failure of
others to meet their obligations to the Company; changes in the
method for determining the London Inter-bank Offered Rate (“LIBOR”)
and the potential replacement of LIBOR and other factors identified
in the Company’s filings with the U.S. Securities and Exchange
Commission (“SEC”).
The foregoing review of important factors should not be
construed as exhaustive and should be read in conjunction with
other cautionary statements that are included herein or elsewhere.
All subsequent written and oral forward−looking statements
attributable to us or persons acting on our behalf are expressly
qualified in their entirety by these cautionary statements. The
Company undertakes no obligation to publicly update or revise any
forward−looking statement, whether as a result of new information,
future events or otherwise.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures as
defined by Regulation G of the rules of the SEC. These non-GAAP
financial measures are not in accordance with, nor are they a
substitute for, GAAP measures. The Company believes these non-GAAP
measures provide users of its financial information meaningful and
useful insight in evaluating the performance of the Company.
Investors should consider non-GAAP measures in addition to, and not
as a substitute for, or superior to, the comparable GAAP measures.
Please refer to the Company’s Form 10-K filed with the SEC for
further discussion of non-GAAP measures.
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Arch Capital Group Ltd. François Morin (441) 278-9250
Arch Capital (NASDAQ:ACGL)
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