Friday, 29 March 2024

Global insurers to feel coronavirus impact through financial market volatility, says Moody’s

Global insurers and reinsurers are exposed to the coronavirus outbreak directly through a potential spike in claims, and indirectly through the impact on economic growth and the resultant financial market volatility, according to a report from Moody's Investors Service. 

“European insurers' Solvency II ratios are particularly sensitive to financial market volatility and movements in bond yields and credit spreads. Sharp deterioration in financial markets over the past week will weigh on insurers' profitability and capitalisation”, noted Moody’s senior credit officer Brandan Holmes. 

An economic slowdown triggered by the outbreak will crimp business volumes for insurers and also lead to higher claims for certain types of insurance, including trade credit and event cancellation insurance. The international financial research provider also expects weaker investment returns on insurers' investment portfolios, including losses on equity exposures. 

For life insurers across the globe, mortality levels would need to rise significantly to trigger a substantial rise in claims, although there is still a lot of uncertainty as to the ultimate level of deaths. More broadly, Moody's believes that non-life insurers' exposure is limited and consequently does not expect a significant claims impact. 

While global reinsurers’ exposure to Chinese life and health insurance – and critical illness cover, in particular – has grown significantly in recent years, it remains a modest part of their overall portfolios. Life and health cover also accounts for only a small share of the wider Chinese market, which is savings-focused.

Re-disseminated by The Asian Banker

Diary of Activities
Finance Vietnam 2024
18 July 2024
Finance Thailand 2024
25 July 2024