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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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Market Conditions

Texas Sees Significant Homeowners Rate Hikes In April

The top two most-impactful homeowners insurance rate increases approved in April were both in Texas, according to an S&P Global Market Intelligence analysis.

There were 14 rate increases in the Lone Star State during the month, which could lead to an additional $110.2 million in premiums written. The calculated increase in premiums written is the largest for any single state for April.

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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As Asset Managers and Insurers Pair Up, Complementary Skills Support Their Union So Far

There is a long history of cross-sector pairings of insurance companies and asset managers.

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Oscar Health Pushes Global Insurance Sector's Total IPO Proceeds to $1.88B In Q1

Global insurance and insurtech companies raised about $1.88 billion from eight IPOs in the first quarter of 2021, the highest recorded since the first quarter of 2016.

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EMEA Insurance Monitor: May 2021

The recovery of the bond and equity markets helped restore much of the capital surplus that European insurers lost in 2020. Full-year 2020 results also showed limited asset impairments, and S&P Global Ratings expect this risk to reduce further in 2021.

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ESG

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.

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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How Are Insurers Staying Ahead of the Curve?

Environmental, social, and governance (ESG) has been a nearly ubiquitous topic of conversation among investors in recent years, bringing to light important questions: How do you measure it? How do you report it? Why should you use it? However, to date, few U.S. insurance companies have incorporated ESG into their policy guidelines, and the practicalities of implementing ESG are rarely addressed.

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Life Insurance

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. While inflationary risks have risen because of increases in consumer prices--prompting the question of whether the Fed will raise interest rates--in our base case, S&P Global Ratings expect a lower-for-longer interest rate environment.

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.

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Tech

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.

While the companies did not directly purchase Bitcoin or Ethereum, they did participate in investment vehicles that derives their value from cryptocurrencies in the form of shares of Grayscale Bitcoin Trust or Grayscale Ethereum Trust.

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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Data Key To Improving Insurance For SMES

Collecting more data from small and medium-sized enterprises should improve the prices and terms their insurers offer them, according to panelists on an S&P Global Market Intelligence webinar. Gathering that data does present challenges, however, and smaller businesses are keen to avoid greater commoditization of their cover.

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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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