General Insurance Article - Reinsurers show weak halfyear earnings as COVID claims rise

 “Global reinsurers reported a broad-based improvement in pricing, extending beyond previously loss-making lines of business,” according to Moody’s Vice President Christian Badorff. “Price increases in recent policy renewals are in the mid-to-high single digits on average, and significantly higher natural catastrophe-exposed business in the US and Asia-Pacific.” 

 Pricing increases will be beneficial, however; the significant drop in interest rates has substantially affected investment yields during the first half of the year. The lower yields will pressure margins, particularly on longer-tail casualty lines. Moreover, reinsurers will need to contend with an active hurricane season, among other natural disaster and man-made losses.

 During the second quarter, pandemic claims rose significantly for some reinsurers compared to the first quarter of the year. In non-life, there was a significant variation between companies owing to differences in how the assessment of claims exposures has evolved since the end of the first quarter. Large, multi-line reinsurance groups were typically hit the hardest while travel insurance and event cancellation claims rose substantially over the six months, and business interruption claims and litigation started to arrive in the second quarter.

 Reinsurers with life operations reported emerging claims in the second quarter and Moody's expects these to rise further over the remainder of the year.

 Sector In Depth - Global Reinsurance