Second wave may double Covid-related losses, insurer Beazley warns
INSURER Beazley came under fire yesterday as it revealed a second wave could double its losses from Covidrelated claims to $340m (£267m).
Shares in the Lloyd’s of London insurer, which sells commercial insurance products, tumbled more than 14pc as it told investors that continuing high levels of infections would lead to a slew of event cancellations. The company said it was particularly badly hit as selling cover for conferences in the US and UK was its biggest business and most of these cannot go ahead due to government restrictions.
It warned conferences that were previously postponed were now being cancelled, causing an increase in its expected losses. The insurer also anticipates claims for events in 2021. Meanwhile,
Boris Johnson told MPs that conferences could not go ahead from October, as previously planned, due to a flare-up in cases.
The updated estimates are based on the assumption of a return to “some form of normality” in the second half of 2021. But further disruption throughout next year would lead to an extra $50m of losses net of reinsurance, Beazley said. Lloyd’s of London expects its members to pay £5bn for Covid-19 claims. The prospect of a further tranche of claims against insurers has sent share prices tumbling. Hiscox closed down 2.5pc while RSA fell 4pc.
Beazley had previously warned of uncertainty over its final Covid bill. But analysts were unimpressed with its failure to indicate that its exposure could double in the event of a second lockdown, including before a £247m fundraising in May and its half-year results in July. Philip Kett, an insurance analyst at Jefferies, said: “Given that there was no change in the estimate for Covid-19 claims in Beazley’s … results, it’s disappointing that management have now lifted the guidance from $170m to $340m.”
Beazley hopes to take advantage of a rapid increase in prices. These were 13pc higher by the end of August.