According to a new report from Bloomberg, the cumulative cost of COVID-19 claims for the largest life reinsurers hit $4.4 billion in the first quarter of the year as mortality rates spiked.
The biggest costs for life reinsurers came from the US and to a lesser extent the UK and Canada but it was also claims from other countries including South Africa and in Latin America which added to the costs.
However, with the vaccine rollout resulting to a drop in deaths in the US and UK, firms such as Swiss Re, Reinsurance Group of America (RGA), Munich Re and Hannover Re are expecting profit recovery to start.
Bloomberg estimates Swiss Re accounted for around 35% of claims followed by RGA on 27% but the decline in deaths should mean much lower claims for the second half of the year.
Bloomberg reported that Swiss Re booked COVID-19 losses of $972 million last year and $570 million in the first quarter while SCOR Global Life saw a €314 million ($383 million) loss in 2020 and €162 million ($197 million) in the first quarter.
Munich Re saw €370 million ($451 million) loss from COVID-19 last year and €167 million ($203 million) in the first quarter while Hannover Re’s claims were €261 million ($318 million) last year and €151 million ($184 million) in the first three months of this year.
BI Senior Industry Analyst Charles Graham said: “COVID-19 mortality claims rose sharply in the first quarter after deaths spiked in the US, UK and other countries.
“New variants of the virus remain a threat yet the success of vaccines give reinsurers hope mortality claims won’t return to first quarter levels.”