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Re/insurers’ public COVID-19 losses hit $23.7bn with more to come in Q3 & Q4

26th October 2020 - Author: Luke Gallin

Publicly recorded COVID-19-related losses among the largest global re/insurance companies have reached USD 23.7 billion, with further increased loss estimates anticipated for both the third and fourth quarters, according to analysis by Zurich-based financial services advisory, PeriStrat LLC.

coronavirus-covid-19-pandemicLosses related to the ongoing pandemic continue to trend upwards, and with Q3 reporting season now underway, the expectation is that the USD 23.7 billion figure will rise further after jumping by around USD 1.3 billion from PeriStrat’s previous estimate for Q2.

While Q3 results season has only just started, some companies have pre-announced their expected hit from the pandemic and warned on profitability. This includes German-based reinsurer Munich Re, which added USD 800 million to its COVID-19 losses for Q3.

Updated loss estimates related to the pandemic have also been announced by Arch, AXIS, Travelers, Argo, RLI, and WR Berkley.

Despite the higher figure reported by Munich Re, the highest public loss number collected by PeriStrat remains that of Lloyd’s of London, at a new high of USD 3.9 billion. Lloyd’s previously announced a range with a midpoint of USD 3.65 billion, but as noted by PeriStrat, H120 net figures include a forward looking statement about losses of USD 780 million to come, with a 40% reinsurance recovery assumed.

After its Q3 pre-announcement, Munich Re has moved up to second on the list with total losses of USD 2.725 billion, followed by Swiss Re at USD 2.5 billion, AXA at USD 1.47 billion, and then Allianz at USD 1.415 billion. The only other firm with estimate losses related to the pandemic of more than USD 1 billion, so far, is Chubb, with a total of USD 1.37 billion, as reported by PeriStrat.

The top ten is completed by Zurich at USD 750 million, AIG at USD 730 million, Hannover Re at USD 705 million, and QBE at USD 600 million.

A full list of publicly disclosed COVID-19 loss estimates can be found here, alongside the date on which these figures were released.

Of course, with the likes of Munich Re revealing the addition of a significant volume of further losses in Q3, it’s expected that some of the other large, global insurers and reinsurers will also report a substantial level of additional claims.

“As mentioned in previous reports this is still less than most of the publicized market loss estimates which range from USD30b to USD80b,” says PeriStrat.

Adding: “We strongly believe that Q3 and Q4 will reveal further increased loss estimates. The prolonged Covid-19 situation will drive further event cancellation covers to be triggered in 2021. Potential GTPL and D&O losses have not yet been greatly notified and will further extend the tail of the loss development pattern. The court ruling initiated by FCA in UK will very likely add to loss estimates going forward.

“Potential policy makers’ interventions in US to eventually force BI insurances to respond to Covid-19 linked business interruptions are still uncertain. So far US courts have decided mostly in favor of insurers with a few exceptions.”

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