Since the World Health Organization declared the outbreak of the coronavirus to be a pandemic, the world has been in a state of emergency. The drastic measures taken by the affected countries to contain this pandemic underline the seriousness of the situation – for societies, the economy, and every individual.

Although the exact effects of the situation cannot yet be predicted, there are no grounds for concern about the stability of our company. The Group’s economic position remains strong even in the current circumstances. Munich Re will be able to withstand the financial burden of this pandemic.

Despite the global increase in the number of infections and loss of life, we currently do not expect a major strain on the life and health insurance segment. Although a severe global pandemic is the largest possible accumulation risk in this category – especially since pandemics are of course not excluded from life and health insurance – we do not currently anticipate the severity to reach several hundreds of thousands of casualties worldwide. Even in the very unlikely scenario of a worldwide pandemic equivalent to a 200-year event, insurance claims are expected to be similar in scope to a medium-sized natural catastrophe in property-casualty reinsurance.

For many lines of business (especially non-life insurance such as business interruption) it has also been common market practice to exclude the risk of a pandemic outbreak from insurance cover. Nevertheless, and driven by the insurance of major events, a pandemic scenario - depending on its severity - could also lead to significant but manageable losses in property-casualty reinsurance.

With regards to our investment portfolio, while high uncertainty prevails, we expect the impact of falling equity markets, lower interest rates and widening credit spreads be manageable at this point in time. If a worldwide pandemic with the aforementioned effects were to occur, more far-reaching upheavals on the capital markets and more significant implications for our result cannot be excluded. However, Munich Re entered into the current situation very well capitalised, with one of the strongest S2-ratios among its European insurance peers.

In overall economic terms, we currently anticipate the impact of the virus to broaden, although the consequences depend very much on how quickly it can be contained. Generally, we expect to see further volatility and/or losses in all markets over the next few weeks and months, due to the deteriorating virus situation and the plummeting oil prices. Over the longer term, the absence of any safe havens with acceptable yield levels should be pushing the markets back into risk assets and creating new opportunities.

In 2017, Munich Re set up its own “Epidemic Risk Solutions” global business unit. This unit offers customised insurance products for companies in certain sectors (e.g. in hospitality/tourism, event organisation, construction, etc.), and those products are currently in great demand. However, before the outbreak of the coronavirus, demand had been limited, and companies can no longer insure themselves with us against COVID-19.

Epidemic Risk Solutions’ products cover specific risks associated with epidemics, including business interruption, temporary site closure, event cancellation, and prevention services, and they also provide customers with access to external epidemic expertise. This includes support in containing the effects of ongoing outbreaks, or in preparing for future epidemics with the help of virologists and epidemiologist