Covid-19: Global economy to suffer $7,000bn losses..Costs insurers, reinsurers $50bn

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By Favour Nnabugwu

Global economy is to suffer a whopping of $7000 billion in losses, following the coronavirus pandermic that hit the world in the last eight months.

The Chief Economist of the Organization for Economic Co-operation and Development (OECD), Mr. Laurence Boone said the coronavirus pandemic is expected to have lasting effects on the global economy.

The world GDP is to decline by 4.5 percent in 2020 and rebound by an estimated 5 percent in 2021.

“In terms of cost, the losses caused by COVID-19 will reduce global GDP by 7 000 billion USD for the period ranging from November 2019 to the end of 2021”

According to him, “The decline in activities in Europe was less significant than expected in Q2

In the same manner, the COVID-19 pandermic has cost insurers and reinsurers between $35 bn and $50 bn as at 30 June 2020, according to Standard & Poor’s

The first twenty reinsurers alone have sustained a loss of roughly $12 bn that is to approximately 30 percent of the total amount for the entire market.

Most of the losses are accounted for by the risks of major event cancellation, property loans, credit, business interruption and aviation.

The rating agency says insurance professionals are bound to sustain additional Covid-19 losses in the upcoming months.

Meanwhile, AM Best published the list of the top 50 global reinsurers in 2019. Swiss Re ranked first for the second consecutive year. The Swiss company recorded a total of 42.228 billion USD in gross written premi-ums, an increase of 16% compared to 2018.

This performance goes back to the growth of the non-life activity in the Americas and EMEA (Europe, Middle East and Africa). These two regions account for 25.1 percent of Swiss Re’s revenues.

Munich Re takes the second position in the ranking with $37.864 bn in premiums. Hannover Re retains the third place with $25.309 bn in premiums.

AM. Best has pointed out that the top ten reinsurers generate 69 percent of earnings. The average com-bined ratio of all companies stands at 102.4 percent a slight deterioration compared to 2018 (100.9percent).

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