Life reinsurance has fared better than expected in the COVID-19 pandemic and the news is good for P&C lines too, Denis Kessler, chairman and chief executive officer of SCOR, told a media briefing on September 11 ahead of the week the Monte Carlo Rendez-Vous usually takes place.
For life reinsurance, Kessler said: “We believe the cost of the pandemic is going to be below what we said when we presented the half-year results at the end of July.
“As far as the P&C lines are concerned, here, too we are on track; we believe what we have put in the reserves corresponds to the exposure for the group.”
Kessler added that the group’s IT system has enabled it to stay fully operational throughout, and its view of the future is bright.
“We are more optimistic than one year ago at the same period because there are lots of things that seem to pave the way for good improvements to the market,” he said.
He pointed to social inflation in the US, COVID-19, growing risk-aversion and demand for protection as helping to push prices upwards and tighten terms and conditions.
“Many conditions are met for a new phase in the P&C cycle, which is a positive phase—and I am not the only one to say that,” Kessler said.
“When you look around, all market players share the same view.”
Jean Paul Conoscente, chief executive officer of SCOR Global P&C, echoed his enthusiasm, saying that information received over the summer confirmed the assumptions SCOR made in June and July about the impact of the pandemic, leaving the company in a strong position in terms of solvency and ratings.
“Many conditions are met for a new phase in the P&C cycle.”
Discussing the impact of the crisis on the P&C reinsurance market, he noted that it is very different from prior catastrophes such as 9/11.
“The impact on the market is going to be long-lasting across all lines of business, and global,” Conoscente said, pointing to two main drivers: the payback of claims resulting from the crisis and the economic effects as governments and central banks worldwide take measures to help their economies absorb the shock.
“With interest rates depressed globally, technical profitability needs to improve for reinsurers and insurers. It’s not an improvement that has to be short-lived; it has to be a long-term one,” he said.
“We expect an increased demand for reinsurance; individuals and companies are becoming more risk-averse, and insurance companies are looking for additional reinsurance cover to protect their capital and their earnings.
“In this increased demand for reinsurance we also see a tiering of the reinsurance, where there is a higher demand for higher rated reinsurers.
“In this we position ourselves very well,” Conoscente concluded.
Main image: shutterstock.com / Chinnapong