Speaking this morning during his firm’s earnings call, Swiss Re CEO Christian Mumenthaler said that the reinsurer believes the industry loss from the COVID-19 pandemic will come in under a “manageable” $80 billion.
Swiss Re reported its H1 results this morning, confirming the $2.5 billion of pandemic related claims and IBNR it has reserved for in the first-half of this year.
The impacts of the COVID-19 pandemic have been significant for the company, being one of the largest underwriters in the insurance and reinsurance market.
CEO Mumenthaler explained that Swiss Re believes it has already booked the majority of its losses for the COVID-19 pandemic within this $2.5 billion of largely IBNR reserves.
“It’s mostly a Q2 event actually,” Mumenthaler explained today.
The CEO discussed the urgent need for the world to manage the pandemic crisis to avoid the need for future severe lockdowns.
Right now, Swiss Re sees the peak in business closings around the world as being passed, while the mortality peak from the pandemic has also been reached.
“We believe, that a majority of the ultimate loss has been booked now in Q2,” Mumenthaler said.
Swiss Re shared some data looking at the ultimate industry loss from COVID-19 for the property and casualty insurance and reinsurance marketplace.
Mumenthaler compared the loss with a large catastrophe loss year for the industry, highlighting the 2017 hurricanes and hurricane Katrina of 2015 as rough comparatives.
The CEO gave a range of estimates, saying that, “We estimate the overall insurance loss of Covid-19 at $50 billion to $80 billion.”
He noted that there is “a lot of uncertainty around that range,” but said that at this level, which aligns with many analysts, it is comparable with other large industry losses and “entirely manageable for the insurance industry overall.”
He also noted the important role of insurance and reinsurance, but said that it cannot provide for systemic risks like pandemics on its own. Hence Swiss Re is working closely with many parties and governments on ideas for pandemic risk solutions, as it cannot deal with the scale of these potential events on its own.