Posted on Jul 31, 2020 at 6:55 p.m.
The reinsurance liner pitches but does not break in the face of the surge of the pandemic. Ten days after its profit warning, the Swiss reinsurer Swiss Re has admittedly announced an astronomical amount of $ 2.5 billion in claims and provisions for the first half, causing its net income to plunge into the red to the tune of 1 , $ 1 billion. 70% of this amount of provisions covers losses “Proven but not yet declared”, specifies the reinsurer.
Excluding the Covid-19 pandemic, the Zurich reinsurer would have posted a net profit of $ 865 million. However, the group maintains its solvency ratio above its target of 220%. Above all, he believes that the worst is now behind and he does not expect a “second wave”, even if he refuses the game of quantified prospects for the rest of the year.
Last week, its French competitor Scor announced a cost of the Covid-19 of 456 million euros in its accounts, even if the group received only 74 million euros in claims when the results were published. half-yearly. Suddenly, this « earning event », according to the expression of the CEO, Denis Kessler, plunged the net profit of the world’s fourth reinsurer to 26 million euros.
Different impact depending on the profession
Finally, Munich Re, whose final results will be published on August 6, has already revealed losses of around 700 million euros, largely attributable to Covid-19, in particular due to the cancellation or postponement of major events, like the Tokyo Olympics.
The Swiss reinsurer has clearly favored a cautious approach to the crisis while the profession emphasizes the “Considerable uncertainties” which remain on both the evolution of the pandemic and its medium-term impact on the economy. For now, the coronavirus crisis affects business lines differently.
Until now, the pandemic had only a small impact on the risk of mortality, which is rarely guaranteed. But the explosion of deaths in the United States could be a game-changer. The virus, in contrast, affects property damage and liability (P&C) reinsurance. And among the industries most affected are professional liability, credit reinsurance and event cancellations.
Two glimmers of hope
Two glimmers of hope, however. First, demand for insurance, and therefore reinsurance, is expected to increase during the economic recovery expected in 2021, and even exceed pre-crisis levels as early as next year, at least in damage, according to a report. study published by Swiss Re Institue in early July. Then, reinsurers significantly tightened their pricing conditions during the summer renewal campaigns, according to the rating agency Fitch. “In July, prices increased by 6% in non-life insurance”, confirms Swiss Re. Not to mention that reinsurers, more and more concentrated, should also tighten their underwriting conditions, with the key to increasingly explicit exclusions.