9-Month Results Show Reinsurers' Pandemic Losses Starting To Fade

The results of 4 major European reinsurers through the first 9 months of 2020 are showing that pandemic losses are beginning to fade, according to Fitch Ratings.

The results of Munich Reinsurance Company, Swiss Reinsurance Company, Ltd., Hannover Rueck SE, and SCOR SE revealed that fewer new pandemic-related claims reserves were booked in the 3rd quarter of this year than during the 2nd quarter, Fitch said in a commentary.

Event cancellation coverage was the only affected business line that required major adjustments to expected claims, the rating agency said.

Despite pandemic-related claims incurred over the year's 1st 9 months, Hannover Re, Munich Re, and SCOR SE remained profitable, Fitch said, while during the 3rd quarter, Swiss Re substantially reduced its net loss reported after the first 6 months of 2020.

"These relatively strong results were possible as a fairly light natural catastrophe loading and an improvement of the underlying underwriting result helped to compensate for losses related to the coronavirus crisis," the Fitch commentary said.

All 4 major reinsurers have remained well-capitalized so far in 2020, Fitch said, which was partially achieved through the issuance of subordinated debt. That allowed for strong reinsurance premium growth, driven by higher prices, rising demand in Asia, and an increased risk appetite.

Going into 2021, the reinsurance sector expects risk-adjusted prices in property and casualty reinsurance to continue to increase, Fitch said, while the rating agency believes that the pandemic-related claims burden will decline progressively due to the exclusion of pandemic coverage in renewed treaties.