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Pricing improves but COVID-19 and U.S. casualty concerns weigh

Insurance Consulting and Technology|Reinsurance
COVID 19 Coronavirus

March 25, 2021

Willis Re’s Strategic and Financial Analytics teams continue to monitor the financial impact on investment markets and global reinsurer capital positions.

We are pleased to share with you Willis Re’s latest assessment of global (re)insurers’ financial health. This short report summarizes key themes emerging from global (re)insurers’ 2020 results and has been prepared by Willis Re’s Strategic and Financial Analytics teams.

The key takeaways are:

  • Despite COVID-19 related offsets, global (re)insurers achieved premium growth due to rate increases for reinsurance and commercial insurance lines of business, and U.S. premiums outpaced GDP growth.
  • Natural catastrophe claim frequency was a major theme of 2020; this is one factor behind the marked deterioration of Florida property writers’ solvency positions.
  • Social inflation was a key driver of adverse prior year reserve development, mainly for U.S. casualty business; European carriers with U.S. exposure were not immune to this trend.
  • Reserving uncertainty added further momentum to the retroactive reinsurance market in 2020.
  • The global (re)insurers which we track booked approximately $26b of COVID-19 related losses in 2020. There is still a significant degree of uncertainty around ultimate losses – seen in both the high proportion of loss bookings that are IBNR and the wide gap between the bottom-up $26b and the $66b mid-point of top-down loss estimates for the global non-life industry.
  • Capitalization of global (re)insurers rebounded from its intra-year low and remains strong after a challenging year.
  • We estimate that capital raising by global (re)insurers totaled $20b in 2020; a further $4b has been raised YTD and $2b is being contemplated and/or is in progress.
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Contacts

Brian Shea
Willis Re
Managing Director, Strategic and Financial Analytics

Ralph Cagnetta
Executive Vice President, North America

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