Asbestos drags on Travelers; insurer took Q3 charge after upping reserves in ’20

US property and casualty insurers continue to be challenged by asbestos and environmental liabilities issues.

The Allstate Corp. and The Travelers Cos. Inc. in the third quarter took asbestos charges of $111 million and $225 million, respectively. Allstate’s 2021 annual reserve review resulted in unfavorable re-estimates of $111 million, primarily related to new reported information for asbestos and environmental and higher-than-expected reported losses for environmental and other run-off exposures, according to its recent Form 10-Q report.

The US P&C industry’s net incurred losses and loss adjustment expenses for asbestos liabilities rose to $1.38 billion in 2020 from $1.07 billion in 2019, according to data compiled from annual statutory statements.

Of the 15 insurers with the highest asbestos liability reserves, only four increased their reserving last year while the rest reduced theirs.

Berkshire Hathaway Inc. continued to be the largest asbestos liability reserve holder, increasing its reserving to $2.00 billion in 2020 from $1.84 billion in 2019.

There was a significant movement of asbestos and environmental reserves within the group during 2020 as General Reinsurance Corp. Engaged in a loss portfolio transfer of all of its non-Canadian reserves for those exposures to National Indemnity Co.

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Philadelphia-based Bedivere Insurance Co. also increased its asbestos reserves by $144.8 million to $291.3 million. In March, Pennsylvania Insurance Commissioner Jessica Altman filed a petition to liquidate the insurer. The liquidation petition stated that continued runoff was “no longer feasible” given the state of Bedivere’s assets and liabilities.

Bedivere reported a policyholders’ deficit of $277.5 million as of Dec. 31, 2020, compared with a surplus of $35.4 million a year earlier.

On the environmental side, the industry’s net incurred losses and loss adjustment expenses climbed year over year in 2020 to $717.7 million from $404.4 million in 2019.

The Hartford Financial Services Group Inc., Liberty Mutual Holding Co. Inc. and Allstate were among the largest insurers that increased their environmental reserves in 2020.

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