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Law360, London (April 30, 2020, 3:29 PM BST ) Insurance giant Swiss Re revealed Thursday it has taken a $476 million hit in the first quarter of the year from claims linked to the coronavirus pandemic and a further investment loss of $300 million because of volatility in financial markets.
The Zurich-based reinsurer, which has a 15% global market share for event cancellation cover, said the impact of the crisis has pushed the business into a net loss of $225 million for the first three months.
Swiss Re provided a significant portion of reinsurance for the Tokyo Olympics, saying earlier this year it would face a $250 million hit after it was announced that the games would be canceled.
"Swiss Re's business remains resilient despite the financial impact of the crisis on our results," Christian Mumenthaler, chief executive of Swiss Re, said. "Our industry-leading capital position means we will weather this situation as a strong partner for our clients."
The results come two days after U.S. insurer Markel said it would face a $325 million impact from the virus in the first quarter, mostly through claims from its international division, which includes the U.K.
Markel said the loss would largely come from claims for event cancellation and business interruption, "where no specific pandemic exclusions exist."
Claims for canceled events came to $172.5 million for the international division during the quarter, compared to $8.5 million in the U.S. business. Claims for business interruption added up to $92 million internationally, but only $16 million for the U.S.
"While the economic disruption of the pandemic has impacted our financial performance this quarter, we believe we are well positioned to weather the current challenges," the company said in a statement Tuesday.
Investment bank UBS believes that the global insurance industry could face a total combined loss of up to $60 billion from the pandemic.
That was extrapolated based on market share from announcements by Beazley and Hiscox, which said last week they faced a combined $345 million in potential losses from the pandemic. Those estimates do not include the impact of forcing insurers to retrospectively cover business interruption losses where cover did not originally exist, a plan that has been floated by lawmakers in the U.S.
Reinsurance broker Willis Re said that, if that happened, the estimated $800 billion in capital reserves held by insurers globally would be depleted "within days," triggering widespread insolvencies.
--Editing by Ed Harris.
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