Global reinsurance giant Swiss Re has reported what it calls a “significant addition” to its loss reserves for the Covid-19 pandemic, taking the total first-half 2020 hit from the coronavirus to $2.5 billion.
As a result of this impact, Swiss Re said that it expects to report a net loss of approximately $1.1 billion for the first-half of 2020.
Excluding the significant Covid-19 pandemic related claims and reserves, Swiss Re said it would have managed roughly $0.9 billion of group net income for the first half of this year.
The $2.5 billion of pandemic related claims and reserves reported by Swiss Re are before tax.
Swiss Re’s Group Chief Financial Officer John Dacey commented, “Our capital position remains industry-leading. The underlying performance of all our businesses is strong, and they continue to deliver on their strategic objectives, such as the completion of the ReAssure sale.
“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.”
For the first-quarter of 2020, Swiss Re had reported a pre-tax charge of $476 million for its property and casualty businesses due to the Covid-19 pandemic, which was largely from event cancellation claims.
Now at $2.5 billion, Swiss Re said that roughly $1.5 billion of the first-half pandemic losses have hit its Property & Casualty Reinsurance business line, with another $500 million hitting Corporate Solutions.
Most of these losses, on the P&C insurance and reinsurance side, are incurred but not reported (IBNR) reserves, driven by estimates for affirmative property non-damage business interruption and event cancellation losses.
On the Life & Health Reinsurance side, Swiss Re expects another $500 million, largely due to higher mortality claims (reported and IBNR) in the US and the UK versus expected levels.
Swiss Re has also warned on the potential for claims development over the coming quarters, given the uncertainty over the pandemic and how the tail of claims will impact the insurance and reinsurance industry.
Swiss Re said that its solvency levels remain robust, with its Group Swiss Solvency Test (SST) ratio remaining above the target level of 220%.