Global reinsurance firm Hannover Re has become the latest to add a significant increase to its estimate of losses from the COVID-19 pandemic, lifting its total reserved for claims related to the coronavirus by roughly 43% to US $1.44 billion.
Previously, Hannover Re had pegged its loss reserves for the COVID-19 pandemic at EUR 700 million on the property and casualty side, with another EUR 160 million on the life and health reinsurance side of its business, which was roughly US $1.006 billion.
In reporting its results yesterday, Hannover Re added a further significant buffer to its pandemic reserves.
The reinsurer has now added a further €250 million (USD 300mn) to its P&C loss estimate for COVID-19 related claims in the fourth-quarter, as well as a further €100 million (USD 120mn) of losses in its life and health unit in Q4 as a result of the pandemic, largely from its U.S. business.
Explaining the moves, Hannover Re CEO Jean-Jacques Henchoz explained, “We’ve taken a more conservative and also more long-term view on the loss experience, with further reserves added for event cancellations, credit and surety, but also long tail lines like casualty.”
This takes Hannover Re’s estimate of total group claims from the COVID-19 pandemic in 2020 to around €1.2 billion (US $1.44bn), an increase of roughly 43%.
The majority, or €950 million (USD 1.14bn) and around 79% of this, is related to the firm’s P&C reinsurance operations, while the remaining €260 million (USD 312mn), or roughly 21% of the losses, emanates from Hannover Re’s L&H reinsurance business.
Hannover Re’s updated estimate takes publicly reported COVID-19 pandemic-related losses, IBNR reserves and estimates from re/insurance companies to around $30.8 billion, according to data tracked by our sister site Reinsurance News.
Hannover Re’s increase is aligned with other major global reinsurance players and suggests there will be more increases to come through the ongoing quarterly results season.