A.M. Best unveils new estimate of reinsured COVID losses

Recognized COVID-related losses are about US$40 billion for the global reinsurance industry, A.M. Best Company Inc. said in a reported released Aug. 30.

Original estimates of insured COVID losses “easily exceeded” twice that US$40 billion figure, “with around half the recorded losses attributed to the reinsurance segment, but final settled amounts may take many years to develop and could differ materially,” A.M. Best said in Global Reinsurance Outlook Remains Stable in a More Uncertain World, its annual paper on that segment of the industry.

COVID-19 was declared a pandemic March 11, 2020 by the World Health Organization. Two months later, Lloyd’s estimated – based on data available at that time – that the pandemic could ultimately cost the global property and casualty insurance industry more than US$100 billion.

For the Lloyd’s market itself, the original estimated claims cost was more than US$4 billion. At that time, Lloyd’s estimated 31% would come from event cancellation, 11% from credit, 29% from property and 29% from other classes.

For its part, A.M. Best said Aug. 30, 2021 that the largest European reinsurers and Lloyd’s are exposed to event cancellation and non-US/non-property damage business interruption.

“While material reserves for other lines of business—including financial lines, workers compensation, mortgage, and credit—have been booked, reported claims remain much lower than originally expected,” A.M. Best said.

Most business interruption policies are tied to commercial property policies. Depending on the wording, some – but not all – BI policies require some form of property loss to be triggered.

In its latest report, A.M. Best ranked the world’s 50 largest reinsurers by premium, both in life and non-life. A.M. Best has changed its ranking methodology from previous years because of the trend of reinsurers branching out into primary insurance. Starting this year, when ranking global reinsurers, A.M. Best is now including only year-end gross reinsurance premiums written, eliminating any primary premiums.

Canada Life Re (a subsidiary of Winnipeg-based Great-West Lifeco Inc.) ranked eighth globally on the top 50 list. However, Canada Life writes life insurance. A.M. Best reports that Canada Life Re had US$14.552 billion in gross written premiums in life insurance in 2020.

OdysseyRe, which is ultimately owned by Toronto-based Fairfax Financial Holdings, placed 28th when ranked by both life and P&C. Odyssey Group itself is headquartered in Connecticut.

The top 10 by non-life gross written premiums (in US currency) in 2020 were:

• Munich Re, $30.24 billion;
• Swiss Re, $21.51 billion;
• Hannover Re, $20.57 billion;
• Lloyd’s $16.5 billion;
• Berkshire Hathaway, $13.3 billion;
• SCOR, $8.8 billion;
• Everest Re, $7.28 billion;
• Korean Reinsurance Company and China Reinsurance Company, essentially tied at eighth place at $6.42 billion; and
• General Insurance Corporation of India, $6.31 billion.

Feature image by iStock.com/sesame