The global reinsurance sector will fail to earn its cost of capital in 2020 due to the coronavirus crisis, Fitch Ratings says, following a sector ratings review.
Financial performance will be hit by mortality claims and losses from event cancellation, business interruption, credit and surety insurance, as well as by financial market disruption linked to the economic impact of lockdown measures. This follows three years of heightened natural catastrophe losses and increasing US casualty claims, which depressed reinsurers’ returns in 2017-2019.Fitch conducted a review of global reinsurers’ ratings in light of the pandemic in April and May. The credit rating agency says that it assessed each insurer’s pro-forma financial metrics under a set of rating-case assumptions, comparing them with the ratings guidelines defined in its Insurance Rating Criteria and with previously established rating sensitivities for each insurer.As a result, Fitch took negative rating actions on six of the 22 reinsurance groups reviewed. There were two one-notch downgrades (with Outlooks now Stable), three affirmations but with Outlooks revised to Negative, and for one group the Insurer Financial Strength (IFS) rating was placed on Rating Watch Negative. For 15 of the groups, the IFS ratings were affirmed with Stable Outlooks and for one the Rating Watch Evolving on the IFS rating was maintained. The main driver for the negative rating actions was deteriorating financial performance. Details are as follows:
 

Reinsurer Ratings










Reinsurer


Current IFS Rating

(26 May 2020)


Prior IFS Rating






AXIS Capital Holdings


A+/Negative


A+/Stable




Berkshire Hathaway


AA+/Stable


AA+/Stable




Echo Rueckversicherungs


A-/Stable


A-/Stable




Hannover Rueck


AA-/Stable


AA-/Stable




JSC Russian National Reinsurance


BBB/Stable


BBB/Stable




Lloyd’s of London


AA-/RWN


AA-/Negative




Malaysian Reinsurance


A/Stable


A/Stable




Munich Reinsurance


AA/Stable


AA/Stable




Oman Reinsurance


BBB-/Negative


BBB-/Stable




PartnerRe


A+/Negative


A+/RWP




Reasuransi Indonesia Utama


BBB-/Stable


BBB-/Stable




Maskapai Reasuransi Indonesia


BB+/Stable


BB+/Stable




Reasuransi Nasional Indonesia


BB+/Stable


BB+/Stable




Reaseguradora Patria


BBB+/Stable


A-/Stable




Reinsurance Group of America


A/Stable


A/Stable




RenaissanceRe Holdings


A+/Stable


A+/Stable




SCOR


AA-/Stable


AA-/Stable




SIGNAL IDUNA Rueckversicherungs


A-/Stable


A-/Stable




Sirius International Group


A-/RWE


A-/RWE




Swiss Reinsurance


A+/Stable


AA-/Negative




Taiping Reinsurance


A/Stable


A/Stable




Thai Reinsurance


A-/Stable


A-/Stable


Key: RWN: Rating Watch Negative; RWP: Rating Watch Positive; RWE: Rating Watch Evolving

 

 

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