EMEA and US re/insurer's capital buffers to absorb coronavirus claims: S&P

The coronavirus outbreak is not expected to cause earnings and capital shocks to insurers and global reinsurers based in Europe, the Middle East and Africa (EMEA) and the US, says a new report by S&P Global.

Re/insurers are likely to suffer claims exposure from the impact of COVID-19, but S&P believes that it will fall well within the range covered by their capital buffers.

The agency also expects the re/insurers to screen their investment portfolios based on individual asset exposures. Hence, it does not foresee ratings on EMEA and US-based insurers and global reinsurers to be affected.

Overall, S&P expects COVID-19 to have a more-significant effect on capital markets in China and Asia than on those in the rest of the world.

"The effect on global financing conditions has so far been sporadic, but contained," S&P said. "Equity and fixed-income markets appear to have taken a cautiously optimistic view--the S&P 500 is up 3% over the year to date, even after a drop of 0.2% by the end of January. Most major European and Asian equity indices display similar patterns."