Swiss Re Insurance-Linked Fund Management

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Swiss Re grows P&C reinsurance book 20% at April renewals


Global reinsurance giant Swiss Re reported a strong first-quarter to the year this morning despite continued pandemic losses and natural catastrophe claims, delivering $333 million of net income and reporting continued strong premium growth.

swiss-re-building-imageThe reinsurer reported $643 million of losses from the COVID-19 pandemic during Q1 2021, with its life and health reinsurance book experiencing a $570 million hit on high mortality in the US and elsewhere, with the rest of the pandemic impacts in the P&C reinsurance and Corporate Solutions divisions.

Swiss Re’s Group Chief Executive Officer Christian Mumenthaler commented, “The start of 2021 has seen record numbers of COVID-19-related deaths in many countries, and our thoughts go out to those who have lost a loved one. The devastating human toll of the pandemic is also reflected in the financial results of Swiss Re as the world’s largest life and health reinsurer. As we continue to support our clients and communities affected by the pandemic, the underlying performance of all our businesses remains very strong and underpins our confidence.“

Excluding COVID-19, Swiss Re reported group net income of $843 million for the quarter, with a return on equity of 12.9%, which is the company’s strongest first quarter result since 2016.

Swiss Re’s Group Chief Financial Officer John Dacey explained, “The return to profitability this quarter in our property and casualty businesses underlines the earnings potential of our diversified business model. We effectively absorbed the heightened mortality impact on our life and health business and maintained a very strong capital position.“

Swiss Re’s P&C reinsurance division performed particularly well considering the significant losses faced from the US winter storms and Texas freezing weather.

Swiss Re reported property and casualty reinsurance net income of $477 million, with an ROE of 21.6%, which was well up on Q1 2020’s $61 million of net P&C reinsurance income.

Large natural catastrophe losses came out at $426 million across the group, $316 million affecting the P&C reinsurance unit and largely being from the US winter storms.

Excluding the impact of the pandemic, Swiss Re’s P&C reinsurance unit would have reported a $509 million net income for the quarter.

Helping to drive income for the P&C unit has been the increasing rates in global reinsurance and this continued to drive profits and looks set to do so for the forseeable now.

P&C Re’s net premiums earned increased by 5.7% to $5.0 billion the company said, which is driven by new business growth in 2020 and Swiss Re expects to continues to earn through in 2021.

The P&C reinsurance combined ratio was only 96.5%, which is below where analysts had been anticipating it to fall.

The earning through of higher reinsurance rates and growth in premiums will continue into 2022 as well, given the better conditions experienced at January and April renewals for Swiss Re.

The company said that at April it grew its P&C reinsurance premiums by some 20% in volume terms, with pricing up 4% across the portfolio.

“This represents a 20% increase in volume compared with the business that was up for renewal, reflecting attractive transaction opportunities and pricing,” the company explained. “P&C Re achieved a nominal price increase of 4% in this renewal round, more than offsetting lower interest rates and higher loss assumptions.”

Corporate Solutions also reported positive net income of $96 million, up from last years loss of -$166 million.

Here, Swiss Re reports that strong pricing momentum continues and that premiums earned remained stable at $1.2 billion, but with risk adjusted price increases of 13%.

Corporate Solutions delivered a 16% ROE on a 96% combined ratio despite higher than expected natural catastrophe losses of $110 million and the company now sees this important unit as on-track for its 97% CR target.

Looking ahead, Swiss Re expects to continue benefiting from market conditions across reinsurance and insurance.

Swiss Re’s Group Chief Executive Officer Christian Mumenthaler explained, “We have seen a solid start to 2021 and expect all our businesses to continue delivering a strong underlying performance with diminishing COVID-19 losses. I am particularly encouraged by the improving profitability in our property and casualty businesses, supported by strong renewals year to date in improving market conditions.“

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