Global reinsurers face huge losses after Suez Canal blockage, Fitch says
Nearly weeklong blockage will add pressure to first-half earnings, says ratings agency
The blocking of the Suez Canal by one of the world's largest container ships is likely to result in losses worth hundreds of millions of euros for the reinsurance industry, Fitch Ratings said, even as rescue teams successfully refloated the vessel on Monday.
The 400m Ever Given got wedged diagonally across the canal early last Tuesday, blocking the path for hundreds of vessels waiting to transit the shortest shipping route between Europe and Asia.
This event will reduce global reinsurers' earnings but should not materially affect their credit profiles, while prices for marine reinsurance will rise further, the credit ratings agency said.
Shipping rates for oil product tankers nearly doubled after the ship got jammed, and the blockage has disrupted global supply chains, threatening costly delays for companies already dealing with Covid-19 restrictions.
“The ultimate losses will depend on how long it takes the salvage company to free Ever Given completely and when normal ship traffic can resume, but Fitch estimates losses may easily run into hundreds of millions of euros,” Fitch said.
A large share of losses will probably be reinsured by a global panel of reinsurers, Fitch said, adding that this will add pressure to first-half earnings.
Global reinsurers are already on the hook for natural disasters such as winter storms in the US and flooding in Australia, as well as Covid-19 pandemic-related losses.
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