Analysis by Russell Group has shown that the marine re/insurance sector could face huge exposure to a slowdown in the Chinese economy, induced by the coronavirus (COVID-19) outbreak.
The firm found that just six global shipping companies, representing roughly 35% of industry, had a collective $114 billion exposure to this kind of slowdown.
This potentially has significant ramifications for the marine insurance and reinsurance markets, as well as areas such as trade credit re/insurance.
Of the companies spotlighted by Russell Group, Danish firm Maersk was found to have the largest exposure at roughly $27 billion.
Exposure was calculated based on a sample of historic Q1 economic data for shipping operators imports and exports to and from China, with Russell Group’s scenario model outliningthe disruptive impact of the coronavirus on the shipping industry.
COSCO Shipping Lines Co was found to have the second largest exposure with $25 billion and MSC Mediterranean Shipping Company was the third largest at $20 billion.
Evergreen Marine Corp had the fourth largest exposure at $17 billion and Ocean Network Express, Japanese container shipping company had the fifth largest at $13 billion. CMA CGM SA, the French container company had the sixth largest exposure at $12 billion too.
“The shipping industry is at the heart of what we call the transportation layer which enables the flow of money and goods across the global economy,” explained Suki Basi, Russell Group.
“Therefore, it is no surprise that shipping has a significant exposure of $114 billion but there is no reason why shipping companies need to passively accept these portfolio exposures,” Basi continued.
“Russell Data is tracking these movements at an increasingly granular level providing fresh insights to both insurance carriers and corporates. Now is the right time to invest in new technology led analytics that help to build new scenario led models.”