After racking up a larger-than-expected COVID-19 life claims bill in the third quarter, Europe's four largest reinsurers expect additional claims through the rest of 2021 and a lingering virus impact in 2022.
Munich Re, Swiss Re AG, Hannover Re and Scor SE collectively booked just under €740 million in COVID-19 claims and reserves in the third quarter, taking their collective year-to-date total to €2.61 billion. Total claims from the pandemic from those four companies now stand at €11.26 billion.
Third-quarter claims, predominately in life and health, were only slightly lower than the €757 million booked in the second quarter.
The sustained flow of life claims from the pandemic has surprised some reinsurers. Munich Re increased its full-year expectation for COVID-19-related life claims to €600 million from €400 million in the third quarter, having already revised it up from €200 million at the half-year stage. This followed "higher-than-expected" COVID-19 life claims in the quarter of €168 million, Munich Re CFO Christoph Jurecka said on an earnings call.
Hannover Re CEO Jean-Jacques Henchoz likewise said his company's third-quarter claims bill of €140.1 million was larger than initial expectations.
The U.S. continues to account for the bulk of pandemic-related life reinsurance claims, but South Africa has also made a big contribution more recently. Of Hannover Re's overall €403.5 million COVID-19 claims bill for the first nine months of 2021, €197 million came from the U.S. and €149 million stemmed from South Africa. Hannover Re CFO Clemens Jungsthöfel said the losses in South Africa were "particularly significant" in the third quarter, while U.S. losses were down from prior quarters.
Far from over
Executives at Munich Re, Swiss Re and Hannover Re all anticipate continued COVID-19 life claims in 2022. Swiss Re would not be surprised to see lingering mortality impact in the first half of next year, particularly in the U.S., CFO John Dacey said on an earnings call. Dacey does not expect "material losses" from other geographies, but he cautioned that this may change as the pandemic evolves.
Though the virus' impact on morbidity and mortality seems likely to continue to linger into 2022, there are hopes that the effects will continue to lessen. Swiss Re cut its expected loss to $150 million for every 100,000 COVID-19-related deaths in the U.S. from its previous estimate of $200 million, as those now typically dying from the virus were "less insured." The delta wave seems to have plateaued in the U.S., according to Scor Global Life CEO Frieder Knüpling, who expects the impact of COVID-19 will ease throughout the fourth quarter.
Pandemic-related property and casualty claims have remained relatively stable. The only additions in the third quarter were €4 million for Munich Re and $52 million for Swiss Re, excluding the Corporate Solutions business. Munich Re cut its expectation for pandemic-related property and casualty claims in 2021 to €200 million from €300 million. Swiss Re's Corporate Solutions large commercial insurance business saw negative COVID-19 claims of $27 million in the first nine months of 2021 after releasing reserves for its event cancellation business.
While the property and casualty claims bill may not be growing, the pandemic will continue to have an effect on that line in 2022. Munich Re's Jurecka told analysts that the claims adjusting process would "for sure" continue into next year as client insurers determine their own claims. As a result, he said, it was too early to determine whether Munich Re would be able to make releases from its reserves for pandemic claims.
