S&P Global Ratings says the COVID-19 pandemic was a definite earnings event for the global multiline insurers it rates, but not a capital event that would raise regulators’ concerns.
“We calculate that, for the 16 global multiline insurers (GMIs) we rate, net income fell about $8-billion in 2020, on net profit of $36-billion due to the pandemic,” says S&P Global Ratings analyst Marc-Philippe Juilliard. “To put this into perspective, GMIs reported a much larger overall decline of nearly $20-billion in net income.” The report, COVID-19 Took A $8-Billion Bite Out Of Global Multiline Insurers’ Earnings, goes on to say that one-off items not directly related to COVID-19 actually reduced net income even further than the pandemic did, by more than $12-billion.
They add that insurers in the life business, notably, did not single out the pandemic in their financial reporting as a key driver. “The crisis has turned out to be an earnings event for GMIs, and a manageable one, not a serious capital event,” Juilliard says. “That is, no insurer in this group fell into a position where its capital resource became insufficient to meet expectations by regulators.”
Beyond 2020, S&P adds that additional COVID-19 related loses are likely manageable “given that GMIs reported a large share of incurred but not reported losses in 2020 earnings, and also due to the exclusion of pandemic claims that insurers have added to the terms and conditions of policies.”