Swiss Re AG established a reserve of $222 million in the third quarter of 2020 to pay for its share of the claims from the Aug. 4 port explosion in the Lebanese capital of Beirut, CFO John Dacey said Oct. 30.
The reinsurer said in its third-quarter 2020 earnings statement that the Beirut claims "dominated" its man-made losses for the first nine months of 2020. Speaking to journalists about the third-quarter earnings, Dacey said the Beirut claim had come on top of an "unusually active" natural catastrophe season, which had resulted in six losses above $20 million for Swiss Re. The reinsurer's catastrophe bill for the first nine months of 2020 was $1.5 billion, and Dacey said natural catastrophes amounted to between $1.1 billion and $1.2 billion of this.
Swiss Re made a profit of $444 million in the third quarter of 2020 alone, narrowing its loss to $691 million for the first nine months of the year from a $1.14 billion loss at the half-year point. The half-year loss was mainly driven by the $2.54 billion of coronavirus-related claims and reserves.
The reinsurer added a further $428 million to coronavirus reserves in the third quarter, bringing the nine-month total to £2.97 billion, and Dacey said there was more to come for Swiss Re. "I would like for it to be over but it's not, and in future quarters we expect that we will have some continuation of losses," he told journalists. He added that the company "continued to believe" its first-half statement that the majority of coronavirus-related losses have been reserved for.
Dacey's comments come as coronavirus cases continue to rise and several jurisdictions are re-imposing restrictions on individuals and businesses to curb the spread. Dacey said partial lockdowns and restrictions on certain economic activities were "within the expectations of the group when we did our modelling at mid-year and updated it at the third quarter."
But he added that "there remains an enormous uncertainty." He said that the company could be "pretty clear" about claims from event cancellation policies, and "reasonably clear" on business interruption claims, but that this was "absent a new complete wave of global lockdowns for extended periods" which was "not part of our modelling."
"Were that to occur, at least in the Western world, that would potentially provide a whole other wave of losses for the industry," Dacey said. But for now, he said, reserves were "appropriately set" and the company would "continue to evaluate what we have to add on a quarter-by-quarter basis." He added, "It is not over for us. It is not over for the industry."
Of the $428 million of fresh coronavirus reserves, $197 million was for event cancellation, $46 million for business interruption, and a further $46 million for credit and surety. The reserves also included a further $123 million for mortality and $16 million for other business lines.