Analysts at Morgan Stanley do not expect other re/insurers to follow Beazley in significantly increasing revisions in COVID-19 event cancellation loss estimates.
It’s understood the impact of events cancelled in the third and fourth quarter will likely be more modest than in the first half of 2020.
Beazley has increased its estimated cost of COVID-19 claims from $170 million to $340 million.
The claims were from Beazley’s first party business and almost exclusively driven by further event cancellation losses.
Analysts note that Beazley’s dynamics are “company-specific” and a result of an exhausted clash reinsurance programme.
The $70 million contingency loss estimate reported by Beazley in April (which was included in the initial $170 million) represented the “amount of losses” that didn’t fit in the reinsurance programme at that time, although, on a gross basis, the magnitude of losses was already above the reported $70 million.
Now that the clash reinsurance programme has been fully utilized, every event cancellation loss is expected to flow directly through Beazley’s P&L.
However, analysts note that note it is difficult to determine the magnitude of the impact from Q3 and Q4 events that may have been postponed but have yet to be cancelled.
