Swiss Re has announced that claims and reserves related to COVID-19 in the first half of 2020 have amounted to $2.5bn before tax across the group, resulting in a net loss of approximately $1.1bn for the period.
An estimated $1.5bn of the first half losses impacted P&C reinsurance and about $500m impacted corporate solutions.
Swiss Re has classified the vast majority of the losses as incurred but not reported (IBNR) reserves which are driven by estimates for affirmative property non-damage business interruption and event cancellation losses. The impact to life and health reinsurance came up to around $500m, mainly as a result of higher mortality claims (reported and IBNR) in the US and the UK versus expected levels.
The group had already booked $476m of losses related to COVID-19, mainly for event cancellations, in the first quarter.
“Our teams have conducted a thorough and prudent analysis of all potential exposures related to COVID-19. Based on our current information and related assessments, and noting the unusually high level of uncertainty related to these insured losses, we expect the claims and reserves we have booked the first half of 2020 to cover the majority of our ultimate COVID-19 losses,“ said Swiss Re group CFO John Dacey in a statement.
Swiss Re also noted that there remain several COVID-related factors that may impact claims development in the coming quarters, either positively or negatively, relative to its projections:
Future infection and mortality rates
The duration and effects of mitigation measures, including on business activity
The timing of an effective vaccine and/or alternative treatment solutions
Legislative or regulatory efforts and the outcome of court and arbitration cases on coverage issues
The impact of government stimulus packages
The severity and duration of recessionary impacts
Despite the significant losses, Swiss Re said that it maintains a strong capital position with Group Swiss Solvency Test ratio above the target level of 220%, and having completed the sale of its subsidiary ReAssure Group to Phoenix Group Holdings (Phoenix) for GBP1.2bn ($1.53bn) and shares in Phoenix representing a 13.3% stake.
Swiss Re will release the full results of its 1H2020 performance on 31 July 2020.
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