Menu

Reinsurance News

COVID losses likely to exceed Lloyd’s estimate, says Brit

12th February 2021 - Author: Matt Sheehan

Specialty insurer and reinsurer Brit has suggested that the COVID-19 pandemic could “significantly exceed” the $107 billion claims estimate predicted by Lloyd’s last year.

The comments contrast with the view of some other analysts, such as those at Berenberg, who recently reduced their industry loss estimate from $50-70 billion to $40-60 billion.

Notably, the Berenberg estimate is now lower than Swiss Re’s range of $50-80 billion and significantly below the $107 billion Lloyd’s figure, which makes Brit’s outlook particularly pessimistic.

Brit made the forecast alongside the release of its 2020 results, which saw the pandemic push it to a $215 million underwriting loss and a combined ratio of 112.6%.

COVID drove a 15.9 point increase in the combined ratio over the year, primarily impacting Brit’s Contingency (Event Cancellation) and Casualty Treaty books.

RMS

“COVID-19 is a highly unusual insurance event, ‘earning’ over a prolonged period,” the insurer noted.

“Estimating the overall cost is highly subjective and is dependent on factors such as how long lockdowns and social distancing continue, the ability to reschedule events and the potential of minimising cost by either the early cancelling/postponing of events or holding them behind closed doors. All these factors play into our loss estimates.”

Brit also continues to monitor the impact of claims on its wider business and the potential impact of a pandemic-induced global recession, which is expected to bring increased moral hazard, fraud and a more litigious environment generally.

Concerning the Supreme Court ruling on business interruption claims in the UK, Brit says the outcome will not have a material impact on its finances.

Brit’s investment return for 2020 remained positive at $45.5 million despite the impact of the pandemic.

“In the first quarter of 2020, markets suffered their worst quarter since the financial crisis as investors priced in the short-term impact of COVID-19 and potential longer term impact of a global recession,” the company explained.

“Markets subsequently rebounded following fiscal and monetary stimulus and recovered further in quarter four following positive vaccine news, with value stocks performing particularly well.”

Print Friendly, PDF & Email

Recent Reinsurance News

Getting your daily reinsurance news from Reinsurance News is a simple way to receive only the reinsurance industry news that matters, delivered directly to your email inbox.

  • Only email is mandatory, but the more you tell us about yourself the better we can serve you in future!
  • This field is for validation purposes and should be left unchanged.

By submitting the form you are giving your consent to be emailed by us.

Read previous post:
Marsh promotes Ankur Kacker to UK Digital Asset Leader

Global insurance brokerage Marsh has named Ankur Kacker as UK Digital Asset Leader in the Financial & Professional (FINPRO) Practice...

Close