The COVID-19 losses represent the company's best estimate of ultimate insurance losses resulting directly from the pandemic and consequent economic crises. The Nat Cat losses primarily attributable to severe weather-related events in the U.S., as well as civil unrest-related losses in the U.S. of USD 130 million pre-tax, or USD 104 million after tax.
The COVID-19 pre-tax loss estimate comprises short-tail losses of USD 605 million generated primarily from entertainment and commercial property-related business interruption and accident and health (A&H) products including travel insurance products; losses of USD 553 million related to liability insurance products, including professional liability (directors and officers, employment practices, professional liability, etc.), workers' compensation and other liability-related products; and losses of USD 107 million related to insurance credit exposures including surety, political risk and trade credit.
Substantially all of the COVID-19 related losses for liability and credit-related insurance products are classified as incurred but not reported (IBNR) reserves. The loss estimate also includes a USD 100 million IBNR provision to account for the additional uncertainty in the estimates around the company's property, casualty and credit-related exposures, given this unprecedented event.
The COVID-19 estimate does not include a credit for potentially lower current accident year losses from a decrease in exposures, except for a modest benefit for certain casualty claims-made classes. Seventy-one percent of the COVID-19 estimate relates to the company's North America Commercial P&C Insurance segment and 28% to the Overseas General Insurance segment.
These catastrophe loss estimates are net of reinsurance, include reinstatement premiums and comprise losses generated from the company's commercial and personal property and casualty, A&H and life insurance businesses, as well as its reinsurance operations globally.
In addition to the COVID-19 loss estimate, the company will reduce its net written premiums in the second quarter by approximately USD 184 million to reflect its estimate of the exposure adjustments on its in-force policies that have and will result from the impact of economic contraction.
Separately, as part of its second quarter review of legacy exposures for molestation, the company expects to recognize unfavorable prior period development for U.S. child molestation including reviver statute-related claims of USD 259 million pre-tax, or USD 205 million after tax. The reserve development represents the company's best estimate of ultimate loss based on current information.