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Markets in Motion

37th Annual Insurance Conference

Wednesday - Thursday June 9-10, 2021

Join S&P Global Ratings second annual virtual Insurance Conference for two days of exclusive industry insight, thought leadership & essential intelligence.

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COVID-19 Implications

COVID-19 Took A $8 Billion Bite Out of Global Multiline Insurers' Earnings

The COVID-19 crisis cost the 16 global multiline insurers (GMIs) S&P Global Ratings rates about $8 billion in 2020 in aggregate, though it left them with sizable net income of $36 billion—representing an earnings event, not a capital event, for the industry. One-off items not directly related to COVID-19 actually reduced net income more, by $12 billion.

Olympics A Go for IOC; Cancellation Would Have Long-Lasting Insurance Impact

The International Olympic Committee expects the Olympic Games in Tokyo to proceed even as Japan deals with another wave of coronavirus infections.

But with a growing chorus of voices in Japan calling for another postponement or even a cancellation, the specter of long-lasting impact from the Games on the insurance industry still looms.

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U.S. Insurers Boost Stakes In COVID-19 Vaccine Makers In 2020

As a number of pharmaceutical companies rushed to create COVID-19 vaccines in 2020, U.S. insurers added to their equity investments in those companies.

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Insurance

S&P Global Market Intelligence

Stay informed with essential data, news, and insights for Insurance, including resources for underwriting, actuarial, product management, risk management, and investment management.

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Market Conditions

Insurance Companies Outperform Market Even as S&P 500 Hits Fresh Record Highs

Insurance stocks outperformed the broader market in a week that saw the S&P 500 record multiple all-time highs.

The stock benchmark closed the week ending June 25 up 2.74% at 4,280.70, while the SNL U.S. Insurance Index rose 3.44% to 1,388.81.

Texas Sees Significant Homeowners Rate Hikes In April

The top two most-impactful homeowners insurance rate increases approved in April were both in Texas.

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Insurers That Spent the Most on Advertising In 2020

The COVID-19 pandemic forced many advertisers to do more with less. But insurance giant The Progressive Corp. opted to do more with more.

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Big Insurance Broker Merger, Related Deals In Jeopardy as DOJ Intervenes

The U.S. Justice Department's move to block Aon PLC's planned merger with Willis Towers Watson PLC stands to have wide-ranging implications for many players in the insurance brokerage industry.

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Global Atlantic Surges Up '20 Reinsurer Rankings; Munich Re Extends Lead

Private equity-backed Global Atlantic Financial Group Ltd. recorded a massive gain in reinsurance premiums while the 10 biggest global reinsurers were mostly unchanged in 2020, according to an S&P Global Market Intelligence analysis.

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ESG

U.S. Green Banks Urge Congress to Establish A National Climate Bank

Since the first U.S. green bank was established by Connecticut lawmakers in 2011, another 21 have opened in 16 states and 21 other states are seeking to emanate the success of such programs. But this patchwork of lenders cannot meet the need for clean energy financing today — much less mobilize billions from the private sector to help transition the economy to net-zero emissions, green bank officials say.

The national $100 billion climate finance accelerator program proposed by President Joe Biden is critical for taking the market to scale, green bankers asserted during a June 23 webinar hosted by the Center for Climate and Energy Solutions. The federal funding would be passed on to state and local green banks, which today wrestle with a $21 billion project backlog.

Insurers Facing Prospect of Another 'Above-Average' Atlantic Hurricane Season

Insurers with exposure in coastal states may be facing another year of elevated claims from tropical systems as the National Oceanic and Atmospheric Administration's Climate Prediction Center expects a busy 2021 Atlantic hurricane season.

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Reinsurance Plays Key Role as P&C Insurers Deal With Texas Freeze In Q1

Insurers and reinsurers sustained significant insured losses in the first quarter, mainly driven by winter weather in February that paralyzed parts of the southern U.S., particularly Texas.

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Life Insurance

Individual Life Insurance Sales Grow at Rapid Clip in Q1

Increased consumer awareness about life insurance amid the COVID-19 pandemic may have played a key role in boosting sales in the first quarter of 2021, as the industry recorded the largest increase in total life premiums in a first quarter since at least 2018.

The life insurance market logged $48.93 billion in total life premiums in the first quarter, an 8.1% increase from $45.26 billion in the prior-year quarter, an S&P Global Market Intelligence analysis showed.

Individual life premiums rose 9.0% year over year to $38.26 billion from $35.11 billion, while group life premiums went up 5.1% to $10.66 billion from $10.15 billion in the first quarter of 2020.

How Prolonged Low Interest Rates Could Affect U.S. Life Insurers

The dramatic decline of the 10-year U.S. Treasury yield to historic lows in 2020 raised concerns in the life insurance industry about the increased likelihood of lower-for-longer interest rates and companies' value propositions.

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Q1 Data Show Signs of Pandemic-Era Peak In U.S. Life Industry Death Benefits

Death benefits paid by U.S. life insurers surged to a new high on an absolute basis in the first quarter as a resurgence of COVID-19 contributed to adverse mortality for several leading carriers.

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Despite Pandemic, Life Insurance Premiums Edge Down YOY in FY'20

The COVID-19 pandemic did not seem to prod consumers to buy more life insurance, as the industry recorded $186.16 billion in total life premiums written in the U.S. in 2020, a 0.8% decrease from the previous year.

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Auto

Allstate Doubles Bet on Nonstandard Auto with Safeauto Deal

The Allstate Corp.'s deal to bring Safe Auto Insurance Group into the fold of subsidiary National General Holdings Corp. promises to deepen the roster of carriers that have committed to underwriting riskier motorists in a crucial time for the market.

Allstate's recent moves into the nonstandard space parallel rival State Farm Mutual Automobile Insurance Co.'s commitment, also via acquisition, to bring in a permanent vehicle to offer insurance policies for customers whose ages or driving records make for riskier profiles. Months after Allstate announced its deal to buy National General in July 2020, State Farm made public its acquisition of GAINSCO Inc.

Two industry giants that rarely ventured outside the market of preferred drivers have, in the last year, put stakes in the nonstandard auto insurance space. Allstate has already negotiated a deal to build upon theirs.

The macroeconomic timing could be a tailwind for insurers that offer nonstandard coverage, insurance consultant Troy Korsgaden said in an interview. The coronavirus pandemic and related economic contraction pushed many people to drop coverage, the consultant said, adding that the promise of a relatively quick recovery meant a bulge of consumers with lapsed insurance was forced into the nonstandard market.

Berkshire, Travelers Hike Commercial Auto Rates in April

A single rate increase of 3.1% secured by a subsidiary of The Progressive Corp. may be the most impactful of any commercial auto rate hike approved in April, as it stands to boost the group's written premiums by $7.4 million.

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As Autonomous Cars Hit the Road, Insurers Must Navigate Complicated Future

With the prospect of car navigation shifting in the coming years from total driver control to full machine guidance, auto insurance underwriting looks likely to become more complex as well.

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Allstate's Stock Mostly Flat Amid SafeAuto Deal; Big Broker Merger Partners Dip

A relatively quiet, holiday-shortened week saw several deals announced in the insurance industry and mixed results for its stocks.

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Actuary Says NY Livery Insurer's Reserves 'Inadequate' by More Than $500M

The author of an actuarial report on one New York-based commercial auto insurer concluded that the company's provision for reserves to cover unpaid losses and loss adjustments falls more than $500 million short of what he would consider a reasonable level.

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Shipping

X-Press Pearl Loss Will Add to Insurers' Container Ship Headaches

The possible total constructive loss of the X-Press Pearl stands to be the latest in a line of container ship losses for the insurance industry.

There have been two explosions on board the 2,700 twenty-foot equivalent unit-capacity container ship since it initially caught fire on May 21 at anchor near the Sri Lankan port of Colombo. The fire, which had appeared to have taken hold on most of the vessel as of May 26, continued to burn on May 28, according to an update from the Sri Lanka Ports Authority, although it said the blaze "has been contained considerably."

Key Takeaways

  • Hawes estimated that the cargo loss could be between $30 million and $50 million, based on the X-Press Pearl's 2,700 container capacity and an assumption that a container houses an average of $15,000 to $20,000 of goods.

  • A "serious pollution incident" could lead to the claim swelling to "potential hundreds of millions" of dollars, according to Hawes, but that this would only happen if the vessel sinks.

  • Hawes said there were concerns about the size of the vessels, stowage plans' impact on vessel stability, dangerous goods not being declared and crew fatigue amid pandemic-fueled staff shortages.

Research & Insights for Insurance Professionals

S&P Dow Jones Indices

S&P Dow Jones Indices provides the latest in index innovations for insurers, from indices that help product developers provide robust annuity solutions to index-based products that investors can use in their general accounts portfolios. Learn more about our solutions for insurance professionals.

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Tech

Flight To Quality' as Private Insurtechs Draw Big Investments

Insurtech companies on both sides of the Atlantic have turned in numerous large funding rounds thus far in 2021, enticing investors with their return potential and big addressable markets.

Several U.S. Insurers Begin to Dabble with Cryptocurrency Investments In Q1

Six insurers in the first quarter picked up shares of digital currency investment vehicles offered by Grayscale Investments, LLC

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Investors Flocking to APAC Insurtechs With Hybrid Distribution, B2B Models

Asia-Pacific's private insurance technology landscape may be dotted with several unconventional startups seeking to unseat incumbents, but venture capitalists will gravitate toward less disruptive and more collaborative technology startups.

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Credit Concerns

Greensill Collapse Could Make Trade Credit Insurers More Cautious

The sudden failure of supply chain finance provider Greensill Capital may lead to trade credit insurance underwriters treading more carefully in some areas, but specialists say the market should be resilient to the fallout.

Greensill's main trading entity, London-based Greensill Capital (UK) Ltd., called in the administrators on March 8, saying it could no longer pay its debts.

Signs of trouble emerged a week earlier when Credit Suisse Group AG division Credit Suisse Asset Management (Switzerland) Ltd. froze $10 billion of supply chain finance funds, reportedly because of Greensill's failure to renew its trade credit insurance cover, which protects against nonpayment.

Insurance Trade Group Sues Wash. Regulator Over Credit Score Ban

The American Property Casualty Insurance Association has filed a lawsuit against the Washington state insurance regulator after he issued an administrative ban on insurance companies using credit scores to underwrite policies.

The office of Commissioner Mike Kreidler defended the action as a means to protect insurance consumers from a practice it called "inherently unfair." Kreidler has repeatedly backed proposals to do away with the use of credit scores as a rating factor when determining the relative risk of current or prospective policyholders and how much insurers should charge for coverage.

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