Swiss Re chief says further strict lockdowns would be ‘failure of leadership’

Further strict Covid-19 lockdowns would be a “complete failure of leadership” because coronavirus can be brought under control with more limited measures, according to Swiss Re chief executive Christian Mumenthaler.

Like others in the insurance industry, Swiss Re has been hit hard by the epidemic and last week said it is likely to pay out about $2.5bn in claims.

The Zurich-headquartered group is a reinsurer, providing back-up coverage to other insurance companies. Mr Mumenthaler said on Friday that he believes Swiss Re has already booked the majority of claims relating to the pandemic.

While there could be more lockdowns in the future, he did not expect there to be a “copy and paste” of what has happened over the past few months. “With a small set of measures, you can bring it back under control,” he said.

Swiss Re estimates that the overall global economic costs associated with Covid-19 will be $12trn, of which $50bn-$80bn will be covered by insurance. That would make it one of the most expensive events ever for the industry, on a par with the costs of Hurricanes Harvey, Irma and Maria in 2017 and Hurricane Katrina in 2005.

Insurers have already paid out on a variety of claims, from travel cover to event cancellation, but there is a fierce debate over how much they should pay out on business interruption policies. Companies are taking on insurers over the issue in a series of court cases around the world.

Mr Mumenthaler’s comments came as UK lockdown measures were tightened across a large area of northern England following a rise in infections. The area affected, including Greater Manchester and Bradford, has a population of almost 5m people. 

Swiss Re reported a $1.1bn net loss for the first half of the year, down from a $953m profit in the first half of last year.

The company has also had to navigate turbulence in financial markets and the impact of the expected recession on its investment book. Chief financial officer John Dacey told the Financial Times that Swiss Re had sold securities issued by 25 companies since the start of the crisis because of the potential for downgrades from rating agencies.

“We remain cautious . . . we don’t see a V-shaped recovery, therefore we don’t necessarily believe it’s the moment for us to jump in on risk assets in any major way,” said Mr Dacey. “We reduced materially any residual exposure we had to airlines, to leisure, to energy fairly early in the game — I think there are sectors which are going to take a long time to come back.”

Swiss Re shares were up 1.9 per cent to SFr72.60 in lunchtime trading but have lost a third of their value this year.


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