Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Swiss Re puts Q3 catastrophe losses at $3.6 billion


As had been anticipated, reinsurance firm Swiss Re has come out with the largest estimate of losses from third-quarter catastrophe events to-date, announcing a $3.6 billion hit from hurricanes Harvey, Irma and Maria and the earthquakes in Mexico of $3.6 billion after retrocession and before tax.

Swiss Re said that it believes the industry-wide toll from these catastrophe events will be around $95 billion, which is in-line with the other major reinsurance groups around the world.

The hurricane events make up the bulk of Swiss Re’s losses, with the earthquakes contributing just $175 million of the $3.6 billion total.

The company said the estimates remain uncertain and subject to change.

Swiss Re’s Group Chief Executive Officer, Christian Mumenthaler, commented; “The most recent natural catastrophes have been extremely powerful and we extend our sympathies to all those affected by these events. Through our long-standing and close client relationships, combined with our experience in complex claims handling after large natural catastrophes, we can support our clients when they need us most. It is during these times that we demonstrate our differentiated value proposition and show the value of insurance and reinsurance to society.”

Swiss Re’s Group Chief Financial Officer, David Cole, added; “Swiss Re maintains a very strong capital position and high financial flexibility to support our clients’ needs, respond to market developments and execute on our capital management priorities.”

A decent chunk of Swiss Re’s retrocessional protection will have come from the capital markets, through collateralized reinsurance and retro products, as well as from its own Sector Re sidecar vehicles.

The reinsurance firm no longer has any outstanding property catastrophe bonds in play, so the share of losses from alternative capital will be through collateralized products and any quota shares only.

Analysts at Deutsche Bank said that Swiss Re’s losses are almost double their early expectations, but noted that the industry estimate Swiss Re is working from is higher than they had been considering it to be.

They believe this shows a higher than expected market share for Swiss Re in the impacted areas, perhaps suggesting a larger property catastrophe risk portfolio than had been assumed.

Meanwhile, analysts at J.P. Morgan said that Swiss Re’s losses are lower than expected, but they assume a reduction in net income of around $2.2 billion for the year for the reinsurance firm.

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