Free webinar: "Who needs two kidneys?"

04 May 2020

In the wake of the COVID-19 pandemic, the International Monetary Fund has warned that the world's economy will go through the worst recession since the Great Depression. It will also be far worse than the 2008 financial crisis, the international organisation added.

Will insurers' balance sheets withstand the test? Our panel of experts answers questions from Insurance Asset Risk's readers.

  • Swiss Re chief economist Jerome Jean Haegeli
  • DWS head of European insurance Mark Fehlmann
  • Just Group director of financial risk Andrew Bailey


Wonder what having two kidneys has to do with it? The replay is available here

Due to technical difficulties, the webinar ended just before the speakers could offer their concluding remarks - so here are their thoughts in written form:

Jerome Jean Haegeli

"The economic recession is like a car crash without an airbag. While governments needed to step in massively with fiscal stimulus, we now should take very good care of financial capitalism. How do we keep financial capitalism alive? We need an exit plan, not just for lockdown measures, but also for governments to retrace their extraordinary fiscal and monetary actions. Lockdowns and government actions are deeply intertwined, also in their duration. Hence, it is more important than ever before that we do not just kickstart the economies by re-charging 'old batteries', but making sure we have a 'better engine' to start with. Increasing productivity is key and financial capitalism is at the centre. COVID-19 will end, but let's make sure financial capitalism is not weakened as well!"


Mark Fehlmann

"In summary, this crisis has many aspects to it and even more 'known unknowns'. Short/mid-term, the spread widening has provided a (short) window of opportunity to lock in income for insurers – at least for those that are able to put cash to work (in investment-grade and high-yield). Yet at the same time the shape of the recovery, width and depth of whatever letter you want to use to describe it, may mean widespread stress in credit markets and commensurately ratings migration - with potential impact on SCR figures to newly-made allocations - and defaults. Insurers may have won a reprieve in slowly melting away income levels if they choose to invest in credit markets, however they would be wise to choose insurance-aware partners that understand the dynamics of income versus TRR or the impact of rating changes. The crisis most likely will cause a delay of the move into private debt assets, but we believe that momentum will be maintained, since the implication of COVID-19 is probably not 'low for longer' but 'low forever'. In countries with higher domestic government bond yields, investors will have to understand how much they can balance their diversification need with the moral suasion by the regulator/governments to hold onto or even increase their domestic bonds holdings."


Andrew Bailey

"The discussion was interesting, if a little bleak. The crisis has three stages: liquidity which we've seen through; sector credit downgrades which are happening now; and then the wider issue of government credit worthiness. The key point for me is the large uncertainty over government action which is a significant driver of risks to assets the insurance industry holds. Which sectors will they allow back to work? Which sectors will they support? What can governments afford in the short term in respect of economic support, and how, or even if, they can unwind it? How long can stimulus be maintained? Is the dip short enough that prior views on credit hold or is this is changing behaviours enough to need to rethink everything? As one small example given how well my firm has coped with the shift to mass home working I do wonder whether we will need so much office space in the future. "