Sur­vey: Aviation sec­tor has big­gest pan­demic de­fault risk

The Star Malaysia - StarBiz - - Foreign News -

LONDON: The aviation sec­tor car­ries the big­gest risk of cor­po­rate de­fault as a re­sult of the coro­n­avirus pan­demic, ac­cord­ing to a sur­vey of in­sur­ers pub­lished by bro­ker Gal­lagher yes­ter­day.

Only 29% of credit and po­lit­i­cal risk in­sur­ers had seen claims di­rectly re­lated to the virus so far, the sur­vey of un­der­writ­ers, con­ducted in June and July, showed.

Com­pa­nies or lenders buy credit in­sur­ance to get cover for non-pay­ment for goods or ser­vices.

Pan­demic-re­lated credit in­sur­ance claims are, how­ever, likely to rise later this year or early next year, as busi­nesses strug­gle to stave off de­fault, said Matthew Sol­ley, man­ag­ing di­rec­tor of struc­tured credit and po­lit­i­cal risks at Gal­lagher.

Aviation, oil and en­ergy, and tourism were the three sec­tors in their port­fo­lios that con­cerned in­sur­ers the most.

Vir­gin Aus­tralia, Air Mau­ri­tius and Colom­bia-based Avianca are among air­lines to have ceased op­er­a­tions in the past few months, with planes grounded by lock­downs around the world.

In­sur­ers also worry about non-pay­ment by gov­ern­ments, with Zam­bia seen the big­gest risk. In the broader po­lit­i­cal risk in­sur­ance mar­ket, which can cover is­sues rang­ing from ex­pro­pri­a­tion to war, Ar­gentina was seen as the big­gest con­cern.

The sur­vey of 76 un­der­writ­ers from 46 firms in Lloyd’s of London and the broader London com­mer­cial in­sur­ance mar­ket was car­ried out be­tween June 24 and July 9. — Reuters

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