KBRA Europe Releases Research – Coronavirus (COVID-19) and P&C: Not a Straightforward Development

DUBLIN--(BUSINESS WIRE)--Kroll Bond Rating Agency Europe Limited (KBRA) releases a report on the coronavirus disease 2019 (COVID-19) and its potential implications for property and casualty (P&C) (re)insurers.

In general, epidemics could have wide-ranging implications for P&C lines, but whether the ongoing coronavirus outbreak will negatively impact premium income, profitability, and credit quality of these subsectors is not straightforward. The outbreak and its containment by health authorities is still developing and KBRA believes there is substantial uncertainty about the nature and volume of coronavirus-related claims. But if losses are triggered, large commercial and industrial line (re)insurers will likely bear much of the insured loss burden.

But what about potential underwriting losses? Depending on what is covered, there may be some significant business interruption claims, including large single claims from potential cancellations of the Tokyo Olympics or the Euro 2020 football competition. While coronavirus-related claims could have a material impact on underwriting results during certain periods, such claims are unlikely to be a credit event with a material impact on ratings, given the robust capitalisation and sound underlying profitability of the sector’s major players. That said, our views could change as more information becomes available for this rapidly developing event.

Global events on the scale of a hypothetical pandemic could also reveal previously unknown correlations. A result of such higher-order effects can include the acceleration of claims that would hit the balance sheets of large commercial and industrial line (re)insurers. KBRA notes that we are still far off such a scenario and will continue to monitor the coronavirus outbreak and its global containment efforts.

To access the full report, click here.

Related Publications:

• COVID-19: Implications Spread to Life Insurers
• January 2020 Reinsurance Renewals: Cyclicality and Catastrophes
• U.S. Title Insurance 2020 Outlook: The New Normal…For Now
• Quarterly (Re)Insurance Insights

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About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.