Hannover Re, one of the major European reinsurers, has today announced an additional €350 million (USD 420mn) of losses across its property and casualty (P&C) and life and health (L&H) operations from the ongoing COVID-19 pandemic.
Early this morning, the German reinsurance giant updated the market on its experience at the key January 1st, 2021 renewals, reporting premium growth in traditional P&C of 8.5% and an average price increase of 5.5%.
Within the release and also later in the press conference, executives at the reinsurer announced some preliminary key figures for 2020, including group net income of €883 million in spite of an extraordinary year for losses.
For 9M 2020, the reinsurer fell to an underwriting loss as major loss expenditure reached €1.1 billion in P&C, therefore exceeding the budget of €975 million. Of the total, approximately 64%, or €700 million was attributable to COVID-19-related impacts, said Hannover Re at the time.
Today, the reinsurer has announced that the P&C loss estimate for COVID-19 related claims increased by €250 million (USD 300mn) in the fourth-quarter, which is more than the firm indicated in November.
“Here, we’ve taken a more conservative and also more long-term view on the loss experience, with further reserves added for event cancellations, credit and surety, but also long tail lines like casualty,” said Jean-Jacques Henchoz, Chief Executive Officer (CEO).
“This also explains the combined ratio of 101.6%, which would be around 97%, excluding the exceedance of our large loss budget,” he continued.
Additionally, the firm has booked a further €100 million (USD 120mn) of losses in its L&H unit in Q4 as a result of the pandemic, mainly from its U.S. business.
All in all, Hannover Re estimates total claims related to COVID-19 of around €1.2 billion (USD 1.44bn) for the group in 2020.
The large majority of this total, €950 million (USD 1.14bn) or around 79% relates to the firm’s P&C operations. While an estimated €260 million (USD 312mn), or roughly 21% of the loss relates to Hannover Re’s L&H business.
The update from Hannover Re takes publicly reported COVID-19 pandemic-related losses, IBNR reserves and estimates from re/insurance companies to around $30.8 billion.