News wire — 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 were successful in partially refloating the vessel on Monday.
The 400-metre (430-yard) long Ever Given got wedged diagonally across the canal in high winds 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 rating 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.
The owner and insurers of Ever Given also face claims totaling millions of dollars even if the ship is refloated quickly, industry sources told Reuters on Wednesday.
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 U.S. and flooding in Australia, as well as COVID-19 pandemic-related losses.
Reporting by Noor Zainab Hussain in Bengaluru; Editing by Saumyadeb Chakrabarty