Moody's Assesses Impact Of Bird Flu Pandemic

For the life insurance industry, if such an event occurred, Robinson sees a likelihood of these events occurring:

o Investment losses, both on fixed income and equities, could be material. This would probably result from a decline in the equity markets, an increase in bond default rates and widening credit and bid-offer spreads at a time when companies would be required to liquidate investments to pay claims.

o The liquidity risk at primary companies could be exacerbated if reinsurers delay reimbursement to ceding companies.

o Death benefit claims on variable annuity guaranteed minimum death benefits would rise as equity markets decline and mortality rates increase. Additionally, fees on variable annuity accounts would decline with a decrease in account values.