FRANKFURT:
Reinsurer Swiss Re said on Thursday that it swung to a net loss in the first quarter of 2020, as the coronavirus outbreak began to bite.
The loss was $225 million during the period compared with profit of $429 million a year earlier. Analysts had expected a net profit of $59 million, according to Refinitiv.
The disappointing quarter follows a smaller-than-expected profit in 2019 due to claims for a series of man-made and natural disasters, as well as expenses for its U.S. casualty business.
“Swiss Re’s business remains resilient despite the financial impact of the crisis on our results,” Chief Executive Christian Mumenthaler said.
The Zurich-based company said its corporate insurance arm, which has recently reported losses and is undergoing restructuring, set aside $223 million in reserves for anticipated claims related to the coronavirus outbreak, mainly for insurance to protect against event cancellations, a business that it is exiting.
Swiss Re’s combined ratio in its property and casualty division, a key measure of profitability, worsened slightly to 110.8% versus 110.3% a year earlier. Readings below 100 indicate profitability.
Meanwhile,Joachim Wenning,chief executive,Munich Re,said the short- and long-term costs of the coronavirus pandemic are significant but his company is economically fit as it deals with it, the company’s said Wednesday.
Joachim told shareholders at the company’s annual general meeting that he was confident that Munich Re would emerge from the crisis comparatively stronger.
“Although we cannot yet foresee the exact effects of the coronavirus at this time, one thing is certain: our Group is in a solid economic position. The probable short- and long-term costs of the pandemic are substantial. But for Munich Re, these will stay financially well manageable,” Wenning explained.
He continued, “Munich Re’s capitalisation remains very solid. With our strong balance sheet, we remain a reliable partner to our clients. We are furthermore confident of emerging relatively stronger from the coronavirus crisis and of being able to avail of the opportunities likely to arise.”
SCOR
Global insurer and reinsurer SCOR has reported a 23.7% rise in net income to €162 million for the first-quarter of 2020 and a P&C combined ratio of 94.5%, as the company reports a limited impact from the COVID-19 pandemic during the period.
The French reinsurer states that although its Q1 results were not materially affected by the pandemic and related economic and financial crisis, the event is ongoing and the firm warns that it might experience an increased level of claims on both its P&C and Life businesses, as well as higher levels of asset impairments moving forward.
Net income improved from the €131 million recorded in the same period last year, and overall, gross written premiums (GWP) increased by more than 4% to approximately €4.2 billion, against €3.9 billion in Q1 2019.
Starting with SCOR Global P&C, and the firm has reported GWP of roughly €1.8 billion in Q1 2020, which is up almost 5% on the €1.72 billion reported in Q1 2019. The unit’s combined ratio improved slightly to 94.5%.
SCOR attributes this robust combined ratio to a limited natural catastrophe experience in the quarter.
While COVID-19 related losses were limited for SCOR in Q1 2020, the reinsurer highlights the rapidly changing landscape and continues to keep a close eye on developments.Within P&C, SCOR notes that many lines of business are simply not loss impacted or have minimal exposure. The reinsurer says that its P&C operation is either not involved or has “incidental and immaterial” exposure in many of the lines of business most affected by the pandemic, such as event cancellation or contingency business.
SCOR emphasises the fact that during Q1, the hit to its Life side from the pandemic was limited, adding that the current situation remains well-below the 1-in-200 year pandemic extreme scenario disclosed by the reinsurer.
SCOR notes that the key exposures relate to mortality business, most notably in the U.S., where the firm has a diversified portfolio predominantly exposed to younger age and higher socioeconomic groups. In addition, SCOR says there is limited exposure to business lines impacted by economic downturn, and warns of some potential positive offsetting impacts over time from its longevity and long-term care portfolios in France.
SCOR emphasises the fact that during Q1, the hit to its Life side from the pandemic was limited, adding that the current situation remains well-below the 1-in-200 year pandemic extreme scenario disclosed by the reinsurer.
SCOR notes that the key exposures relate to mortality business, most notably in the U.S., where the firm has a diversified portfolio predominantly exposed to younger age and higher socioeconomic groups. In addition, SCOR says there is limited exposure to business lines impacted by economic downturn, and warns of some potential positive offsetting impacts over time from its longevity and long-term care portfolios in France.
For insurers and reinsurers, so far, it appears that the underwriting experience form the pandemic has been limited, with more sizeable impacts being seen on investments as a result of COVID-19-induced financial market volatility and significant equity market declines.
SCOR notes that it entered the pandemic with a resilient and defensive investment portfolio, with limited appetite for asset risks.“The resilience of SCOR’s operational capability, supported by high-performance IT systems and applications, means that the Group can continue to serve its clients in this period of crisis and immediately respond to their reinsurance needs.
“The coronavirus pandemic is being addressed by governments via lockdown policies and fiscal stimulus and by central banks via monetary policies to support financial markets and liquidity concerns. The outcome of these efforts, and notably the timetable at which the spread of the virus subsides, will become clearer over time,” says SCOR.