Following a virtual meeting with some of the world’s leading insurers, Wells Fargo Securities believes the breadcrumbs are there for 2021 to be the hardest market the P&C industry has seen in some time.
Analysts have noted how it seems like momentum is building for this to be one of those markets that draws new capital to the space and a new round of re/insurance startups could be forthcoming.
On COVID-19 more generally, P&C insurers were not overly concerned about business interruption losses, as most have virus exclusions on the majority of policies.
The pandemic should be the largest insured loss for the industry, although it is still fluid and no one provided more info on their losses away from Q1 earnings.
Analysts’ sense is that half of the losses will fall to the primary market and half to reinsurers, although this is dependent upon how the losses hit various business lines.
The largest takeaway for Wells Fargo Securities is that COVID-19 has the potential to cause a broad-based turn in the insurance and reinsurance markets.
Meanwhile, insurance brokers continued to reinforce expense discipline as they face the economic slowdown and the potential for at least a couple of quarters of slower organic growth.
In life, themes from earnings were reinforced – sales will be constrained, liquidity is key, and COVID-19 related losses appear manageable for the most part.
Analysts note how conversations have shifted from a few weeks ago with earnings, when investors were thinking about downside scenarios, to one where they are now thinking about the potential for future opportunities and what margins could look like coming out of COVID-19.