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Law360, London (July 21, 2020, 2:30 PM BST) -- Global reinsurer Munich Re has said it has taken a €700 million ($800 million) hit as a result of the COVID-19 outbreak in the second quarter of 2020, bringing to €1.5 billion its total losses so far from the pandemic.
The German company said on Monday that the biggest slice of the losses came in claims after major events were canceled. Munich Re is one of the main insurers for the Tokyo Olympics — which should have taken place this summer — but has declined to say how much it has had to pay in claims after the event was postponed to 2021.
It warned that it foresees "considerable ongoing uncertainty" and expects that to continue into next year.
The company has said it faced a €800 million blow from COVID-19 in the first quarter, and retracted its predictions for how much profit it would make this year. It also canceled in March its plan to buy back from investors €1 billion of its own shares.
The company said on Monday that it made the decision at the time because it wanted to see how much capital would be required to pursue "organic or inorganic business opportunities."
"At this time, Munich Re perceives considerable ongoing uncertainty with respect to the macroeconomic development and the financial impact of COVID-19, and does not expect that uncertainty will subside between now and early 2021," the company said.
The reinsurer said it has identified "truly favorable conditions for growing its reinsurance business" and an outlet for its capital. It said that, for that reason, it will "definitely not" implement its share buyback program.
Despite the losses from claims, the company posted a result of €600 million in the second quarter, owing to fewer major catastrophes.
Willis Re said at the start of the month that losses suffered reinsurers because of the pandemic would be an "earnings event" rather than something that eroded capital bases. Reinsurers have reported losses of just $6 billion, or $13 billion if full-year estimates are taken into account — far lower than anticipated at the start of the pandemic, the broker said.
The company has estimated that the industry's losses from the pandemic could reach between $30 billion and $100 billion. Lloyd's of London has estimated that global underwriting and insurance investment losses for the sector could exceed $200 billion.
--Editing by Ed Harris.
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