Natural catastrophes and COVID-19 could generate over $100 billion in global insured losses across 2021 according to Bloomberg Intelligence.
Analysis indicates that insurers’ Tier 2 bonds have tightened significantly, leaving limited room for further compression.
Furthermore, according to data from Fitch, insurers’ reported natural-cat losses in Q1 could be more than $20 billion in the US, far in excess of the historical average.
Bloomberg Intelligence notes how Swiss Re has reported the biggest hits to date, with $426 million related to large natural catastrophes and $643 million from COVID-19, taking total pandemic losses to about $4 billion.
Interestingly, the reported losses don’t yet fully reflect the UK Supreme Court’s January ruling that policyholders’ business-interruption losses must be paid.
However, analysts believe premium-rate increases in 2021 could translate into good operating results and higher interest rates can raise capital levels.
Bloomberg analysts expect credit ratings to be stable, with limited spread-compression prospects for the industry.
