Swiss Re beats on net income, prioritises underwriting discipline and reduces nat cat volumes

Global reinsurance firm Swiss Re has beaten analyst forecasts for group net income in the first-quarter of 2026, despite prioritising underwriting discipline and reducing its natural catastrophe volumes at renewals year-to-date.

Highlighting the more competitive market environment in property and casualty reinsurance, Swiss Re said it has adjusted its business mix as it undertakes cycle management to manage profitability.

For the first-quarter of 2026, the reinsurer has reported group net income of $1.5 billion, a 19% increase on the prior year and smashing analyst consensus of $1.193 billion by roughly 27%.

Lower volumes underwritten at P&C reinsurance renewals so far this year meant that the P&C net income came in lower than anticipation at $754 million which was still higher than the prior year’s $527 million, supported by a lower combined ratio than forecasts would have suggested this year as well at 79.5%.

Swiss Re has taken the approach of reducing underwriting in parts of the market where it deems returns to be inconsistent with its strategy now, reacting to market softening in order to maintain profitability it seems.

CEO Andreas Berger commented, “Our first-quarter performance shows strong earnings generation, reflecting the strategic actions taken in recent years to reinforce our businesses. In a more challenging market environment, we are focused on active cycle management in our P&C businesses, as well as underwriting discipline and efficiency across the Group.”

CFO Anders Malmström added, “L&H Re made a strong start to the year following the completion of the portfolio review in 2025, while our P&C businesses continued to benefit from high-quality business written in recent years. We also took a prudent approach to managing current geopolitical volatility, including setting aside additional reserves for potential inflationary impacts of the ongoing Middle East conflict.”

Overall insurance revenues across the group fell slightly to $10 billion, from $10.4 billion in the prior year, with a reduction in P&C reinsurance the main driver.

However, across the group, the insurance service result which reflects underwriting profit rose to $1.7 billion, from $1.3 billion a year earlier.

New business contractual service margin (CSM) fell to $1.2 billion, from $1.7 billion in the prior year quarter, which Swiss Re notes was reflective of, “the impact of P&C Re renewals in January, as well as a lower
contribution from L&H Re mainly due to lower transaction activity.”

The P&C insurance service result rose to $795 million in Q1 2026, from $575 million last year, with low natural catastrophe losses a driver, as Swiss Re reported only $133 million of large nat cat claims driven largely by storm Kristin’s impacts in Portugal in January. Large man made losses came in at just $41 million for the quarter.

Reduced P&C volumes and the renewal outcome in a softer market, dented P&C Re insurance revenues, being $4.1 billion in Q1 2026 compared to $4.5 billion a year earlier, while the challenging pricing environment was cited as driving P&C Re new business CSM to $1 billion, lower than $1.4 billion in the prior year.

At the renewals, Swiss Re has clearly taken a selective and disciplined approach, pulling-back on property catastrophe reinsurance writings as it manages the softer stage of the market cycle.

Which differs somewhat from the strategy of fellow big-four reinsurer SCOR, who yesterday reported further growth into property cat volumes.

We’ve seen these differences in strategy among the big four reinsurers before, most notably in the early to mid-2010’s, when SCOR was again a company that opted to grow into a softening property cat marketplace, while others were pulling-back earlier.

Which strategy proves the right one in 2026 and beyond remains to be seen, as companies have different levers to assist in managing the cycle, SCOR having increased its retrocession, while Swiss Re and also Munich Re have opted to reduce its external retrocession at this stage of the cycle.

Swiss Re has reported an 8% volume decrease at the April reinsurance renewals, saying, “The outcome reflects continued discipline and active cycle management amid a more challenging pricing environment, with a continuation of the trends seen in January.”

The company also reported a nominal price decrease of 2.5% at the April renewal round, “while maintaining stable terms and conditions.”

“Based on a prudent view on inflation and updated loss models, loss assumptions increased by 3.6%, resulting in a net price decrease of 6.1%. The resulting portfolio quality is supportive of the Group’s 2026 financial targets,” Swiss Re explained.

Diving into some of the disclosures, the pull-back in property catastrophe risks is apparent.

Year-to-date, across the Swiss Re business, gross premium volumes are down around 2%, with the nominal price change around flat as casualty increases offset property declines.

Year-to-date, nat cat reinsurance volumes are down 11% so far, the company explained, with property down 3%, specialty down 3% and casualty up 4%.

On a net basis, the nat cat decline is only 4% thanks to the reduction in external retrocession though, which perhaps shows Swiss Re being willing to retain more risk just so long as it meets its strict underwriting and profitability guidelines and targets.

The main changes are being seen in the United States it seems, with gross premium volumes YTD in the US down 8% so far at renewals, APAC down 5% and EMEA writings up 5%.

Again, that’s a difference to SCOR, who said it has been growing into property cat specifically in the United States in 2026.

Looking ahead to the rest of 2026, CEO Andreas Berger said, “Swiss Re delivered strong earnings in the first quarter, putting us on a good path towards our 2026 financial targets. Against an uncertain macroeconomic backdrop and an increasingly challenging market environment, our P&C businesses continue to prioritise disciplined underwriting. We expect L&H Re to make a growing contribution to balance the Group’s overall performance going forward. At the same time, we are firmly focused on cost efficiency. Our goals remain: delivering on our financial targets and on the Group’s overall resilience.”

As an aside, the difference in strategy between Swiss Re and SCOR, when it comes to property cat risks, is reminiscent of the start of the last meaningful soft market period, when one grew and the other began pulling back.

We’re likely to see more differences in strategy emerging, as players manage the market cycle in their different ways, with use of retrocession and third-party capital likely to become more important than ever for some, while perhaps reducing in priority terms for some others. Something to watch for over coming quarters and years.