Swiss Re Insurance-Linked Fund Management

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Swiss Re puts initial hurricane Ian loss estimate at $1.3bn net of retro


Global reinsurance company Swiss Re has announced its initial loss estimate after major hurricane Ian, pegging it at $1.3 billion, which is net of retrocessional recoveries and before tax.

swiss-re-building-logo-newSwiss Re said that it estimates the preliminary total insurance market loss from hurricane Ian at between US $50–65 billion, which includes the NFIP’s losses.

Analysts have talked about Swiss Re having a market share of major catastrophe loss events of between 2.5% and 3%, so the $1.3 billion loss estimate is supportive of that kind of split.

Because of the expected $1.3 billion of net losses from hurricane Ian, Swiss Re said that it expects to report a Group net loss of roughly $500 million for the third quarter of 2022.

It also said that its full-year 2022 target of a 10% Group ROE is now unlikely to be reached, given the impacts of losses related to natural catastrophes, the Ukraine war and financial market volatility.

However, Swiss Re said that it “remains confident in the mid-term outlook and committed to its 2024 profitability goals.”

Swiss Re noted that its estimates, of its own loss from hurricane Ian and the insurance and reinsurance market loss, are subject to uncertainty and could need to be adjusted as the claims notification and assessment process continues.

On the rest of its business, the global reinsurance firm said that its Life and Health Reinsurance and Corporate Solutions divisions remain on track to hit their respective 2022 targets of approximately $300 million net income and a reported combined ratio of below 95%.

The Property and Casualty Reinsurance reported and normalised combined ratios have been impacted in the third quarter by an increase in small- to mid-sized claims, Swiss Re said, which it notes were partly driven by economic inflation.

Because of this, Swiss Re said the P&C reinsurance business is unlikely to reach its normalised combined ratio target of less than 94% in 2022.

However, the company said that its capital position remains strong, with a group solvency (under the Swiss SST) ratio of 274% as of 1 July 2022.

This is sufficient to allow Swiss Re to “pursue profitable opportunities in a hardening reinsurance market,” the company explained, while adding that it still remains “committed to its capital management priorities.”

Swiss Re will have shared some of its losses from hurricane Ian with its quota share sidecar partners, through Sector Re and likely also its Viaduct Re arrangement with PGGM.

The reinsurer may also have shared some losses with investors in its insurance-linked securities (ILS) funds offering as well, further helping to reduce the net loss for the company.

Swiss Re’s other retro arrangements may also have responded to such a major loss, however its catastrophe bonds appear to be considered safe by the market at this time.

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