At the end of July, Zurich-based Swiss Re reported a net loss of US$1.1 billion in the first half of 2020 due to claims and making reserves related to the coronavirus pandemic, with the Swiss company’s property and casualty reinsurance division and its corporate solutions arm being the hardest hit – with net losses of $519 million and $301 million respectively.
However, Group CEO Christian Mumenthaler reasoned that the claims and reserves the reinsurer had booked in this period would ultimately cover the majority of its Covid-19 losses. Indeed, excluding the Covid-19 crisis, the Group's net income was $865 million, it said in a statement.
“While the impact on our earnings is significant, it remains manageable as our operations continue uninterrupted, all our businesses are performing well and our capital position allows us to take advantage of attractive opportunities in an improving market,” Mumenthaler said.
John Dacey, Swiss Re CFO, added: "Although the Covid-19 crisis is still evolving, we took a prudent approach to build substantial reserves for the group's exposures already in the first half of this year. This gives us more certainty in the outlook for the remainder of 2020 and beyond.”
Elsewhere, global reinsurer Brit has reported $127.9 million in pandemic-related losses in the first half of 2020. The reinsurer has also reported a negative $120.3 million investment return for the period.
“For Brit … the first half of 2020 has proved to be very challenging, with results heavily impacted by the Covid-19 pandemic and its impact on insurance, investment and currency markets,” said Brit Group CFO Matthew Mark Allan.
On the other hand, however, Brit achieved risk-adjusted rate increases of 8.2 per cent for the period, with almost all classes contributing to the increase. In this positive rate environment, Brit continued to grow its written premium to $1,282.5 million, which is an increase of 6.5 per cent at constant exchange rates.
“While we have seen some positive market developments in the period, the period has been defined by Covid-19,” commented Allan. “The outlook for the insurance market is uncertain and challenging, with underwriting returns that are likely to be impacted by Covid-19 over a prolonged period.”
Over in Bahrain, international reinsurance companies are expected to raise their premiums by 10 to 20 per cent due to the Covid-19 crisis having negatively affected, in particular, the investment portfolios of insurance companies. Dr Abdulla Sultan, CEO of Bahrain Kuwait Insurance Company (BKIC), said that there has been a drop in reinsurance coverage due to a decline in the premium portfolio, the low rate of investment returns and the increase in claims for major risks in recent years given the economic effects of the coronavirus pandemic.
Dr Sultan also noted that market competition in Bahrain is fierce, as 24 insurance companies currently operate here, with a considerably small customer pool, and a population of less than 1.5 million people. He reasoned, however, that Bahrain’s proposed national mandatory health insurance scheme, which is expected to be implemented in early 2021, will have a positive impact on the insurance sector, and will ‘open the way for insurance companies to expand their services by offering insurance products to insure against disease and disability’.