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Financial markets update and considerations for insurers

Financial markets and considerations for insurers

Equities and bonds have displayed significant volatility due to stress observed in financial markets.

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financial markets update and considerations for insurers

In March 2020, the World Health Organisation ('WHO") declared Covid-19 as a pandemic. The months that followed were and continue to be engulfed in uncertainty. Entire countries have been shut down in the form of lockdowns as an initial response to curbing the pandemic, working from home has become the new reality, and our entire social construct has been turned on its head.

Equity markets have fallen initially due to risk-off sentiment and still demonstrate significant volatility, bond yields have reached new lows, bid-offer spreads widened, liquidity has evaporated, and credit default swap (CDS) spreads have surged. These factors, coupled with a looming recessionary period, have meant that governments and central banks have provided significant fiscal stimulus and flexible monetary policies to support economies. These factors have led to ultra-low interest rate environments, which will have an impact on investment returns and add to volatility in financial markets.

© 2020 KPMG Services (Pty) Limited, a South Africa private company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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