With zombie companies likely to fail, insurance firms up premiums
Al JazeeraThese firms lack the cash flow to cover interest payments and are likely to collapse once gov’ts end pandemic fiscal measures. The expectation that hundreds of so-called zombie companies will fail over the next few years and drag on the economy is among the major concerns prompting insurers to reduce risk and charge higher premiums, a trend likely to continue as failures increase, Swiss Re AG has said. Zombies – which lack the cash flow to cover the cost of their debt – are “a ticking time bomb” whose explosive effects will be felt as governments and central banks withdraw measures that have helped keep them alive during the pandemic, Jerome Haegeli, chief economist at the Swiss insurer, told Reuters. Haegeli said the proportion of companies that are zombies certainly increased during the pandemic, as central banks flooded markets with money and governments provided relief. Rein in risk Before the pandemic, about 20 percent of listed firms in the US and UK were zombies, and 30 percent in Australia and Canada, the Bank for International Settlements said in September.
History of this topic
Zombie Companies on the Brink of Bankruptcy as Interest Rates Soar
Live Mint
Zombies: Ranks of World’s Most Debt-Hobbled Companies Are Soaring, and Not All Will Survive
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Associated Press
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The Independent
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