Bird Flu Pandemic Could Affect Life Insurers

Physician's Money Digest, June 2006, Volume 13, Issue 6

Wall Street Journal

Journal

Journal

Headlines of a possible bird flu pandemiccontinually resurface throughout the mediaand the constant "what if" scenario—the virus mutating and transferring amonghumans—has brought up quite a few questionson the investment front.While emphasizingthe remote possibility of a pandemic,an article in the saysthat life insurers would get the short end ofthe stick. Four of the industry giants,MetLife, UnumProvident, StanCorp, andRGA, claim that they have taken into considerationthe possible risks associated withthe avian flu; however, both earnings andshareholder equity could take a hit if thereis a jump in mortality. The quotesthe Insurance Information Institute, whichestimates that a 1918-style pandemic couldcost the industry $133 billion in additionaldeath claims. The report notes that a moremodest outbreak could amount to a littleless than 15% of capital. In addition to lifeinsurers, the says a pandemic couldnegatively affect all human-to-human contactsectors, such as restaurants, hotels, andthe travel industry. Keeping this scenario inmind, the better sectors to invest in wouldbe those that skirt such contact, such asInternet stocks.