Analysts at Fitch have reported that the world’s largest life and health reinsurers remained profitable in 2020, as heightened mortality losses from the coronavirus pandemic have only moderately impacted the segment so far.
Fitch expects mortality claims related to the pandemic to decline in 2021 for Hannover Rueck SE, Munich Reinsurance Company, Reinsurance Group of America Inc., SCOR SE and Swiss Reinsurance Company Ltd due to the global rollout of vaccinations.
This is partly because mortality claims have remained lower than pandemic models imply, due to the very low penetration rate of mortality covers among the older age groups globally that have been most affected by the pandemic.
The key exception to this is the US, where life & health reinsurers have suffered the vast majority of reported mortality claims.
Life reinsurers have also benefited from a lower excess mortality in the insured population than the general population and some natural hedge generated by their longevity books of business, Fitch notes.
More than 2.8 million deaths have been linked to COVID-19 since the pandemic broke out in early 2020.
But although earnings were down among the largest life reinsurers last year, these firms remained profitable and their situation should improve further throughout 2021 if Fitch’s predictions for lower mortality claims prove true.
However, this expectation assumes that virus variants will not diminish the effectiveness of the global vaccine rollout.