Impact of Covid-19 on reinsurers ratings

In May 2020, Standard & Poor's put the reinsurance sector on a negative outlook. This decision follows an increase in claims and a possible deterioration in the loss ratio, two factors that inevitably impact reinsurers' profitability.

notationDespite the foreseeable improvement in renewal terms and the announced tightening of the market at the end of 2020, S&P maintains its negative outlook on the sector.

In one of the reports published in early September of the above-mentioned year, the rating agency estimates that reinsurers would end the current year with a combined ratio ranging between 103% and 108%.

Still according to Standard & Poor's, eight of the world's top 20 reinsurers may not be able to meet their obligations if losses related to natural catastrophes exceed 60 to 70 billion USD by the end of the year.

By mid-2020, reinsurers had already disbursed 12 billion USD for natural catastrophes, while the pandemic has already eroded part of their reserves. Before the pandemic, these reserves had amounted to 32 billion USD. At the end of September 2020, they dwindled down to only 14 billion USD.

At the end of 2020, Fitch Ratings also maintained its negative outlook for the global reinsurance industry.

In September 2020, Moody's changed the growth outlook for the entire reinsurance market from stable to negative.

Standard & Poor’s: reinsurers ratings

Top 10 reinsurers at the end of 2020

  • No ratings higher than those of 2019 have been assigned,
  • Two reinsurers have suffered a deterioration in their outlook,
  • Eight have had their ratings and outlook confirmed.

Top 40 reinsurers

  • Lower outlook for eight reinsurers, seven of which went from stable to negative: Swiss Re, Partner Re, R+V Versicherung AG, AXIS Capital Holdings, Arch Capital Group, Sirius Group and Qatar Reinsurance,
  • Downgrade of Aspen Insurance's rating (A/Negative to A-/Stable),
  • Improvement in the rating of Mapfre Re (A/Positive to A+/Stable), the only reinsurer in the top 40 to receive a higher rating than the one received in 2019.

AM Best ratings: reinsurers ratings

Top 10 reinsurers

No change in the ratings and outlook of the top ten reinsurers is noted.

Top 40 reinsurers

  • Four reinsurers have been downgraded by one notch:
    • General Corporation of India goes from A- to B++ with a stable outlook for both ratings,
    • AXIS Capital Holdings' A+ rating has been revised downwards to A, with a stable outlook for both ratings,
    • Sirius Group declines from A+ to A- with a stable to negative outlook,
    • IRB-Brasil Resseguros goes down from A to A- with a declining outlook from stable to negative.
  • Aspen Insurance Holdings' Outlook decreased from Stable to Negative
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