‘Clearer waters ahead’ - S&P EMEA Insurance Mid-Year Outlook 2021

S&P Global Ratings believes that EMEA insurers are recovering this year following a turbulent 2020, according to its new EMEA Insurance Mid-Year Outlook 2021.

“We estimate that EMEA insurers’ capital surplus diminished by 11 percent against FY2019, after COVID-19-related market stresses initially wiped out up to 85 percent of the EMEA insurance industry’s capital buffer,” said S&P. “We assume that the current capital surplus will sufficiently support ratings this year and next.”

For 2020, S&P estimates that global reinsurers and global multiline insurers’ industrial lines saw COVID-19-related claims totalling €30 billion-€43 billion.

“Following non-life insurance contract renewals, we expect to see only limited development of COVID-19-related claims this year,” it said.

Key risks for EMEA insurers in 2021 are around volatile capital markets, including the potential downward migration of ratings on corporate bonds.
“If realised, these risks could have a negative impact on capital and ratings in 2021,” said S&P. “Ongoing low interest rates will likely remain a burden on operating performance for life insurers in Western Europe.”

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