Swiss Re reports strong profits, stable renewals, reduces external nat cat retro

Swiss Re has reported strong profits and hitting its financial targets for 2025, as well as a relatively stable premium volume for the key January reinsurance renewals. Demonstrating the profitability of the reinsurance business the company will now return more capital to its shareholders, but is a second major player to opt for less retrocession for 2026.

The reinsurance giant has reported net income of $2.8 billion and a combined ratio of 79.4% for its property and casualty reinsurance division (P&C Re), while Corporate Solutions delivered net income of $988 million and a combined ratio of 86.5%, and Life & Health Reinsurance (L&H Re) generated net income of USD 1.3 billion with its portfolio review now completed.

The result was a return on equity of 19.6% for 2025, beating 2024’s 15%, while group net income rose 47% to $4.762 billion and the insurance service result rose 36% to $5.847 billion. Insurance revenue slid slightly by -5%, with the repositioning of the US casualty book in 2025 the main driver.

Swiss Re’s Group Chief Executive Officer Andreas Berger commented on the results, “In 2025 we delivered on two key priorities: achieving our Group financial target and strengthening the resilience of the company. Group net income reached the highest level in our history, reflecting disciplined underwriting, strong investment returns and low large loss activity outside of the first quarter.

“Today’s result also reflects our continued commitment to increasing the resilience of Swiss Re’s business. Having completed the comprehensive review of underperforming portfolios in L&H Re, all three of our Business Units are positioned to deliver consistent results. We have also made substantial progress on our decision to withdraw from iptiQ, with all parts of this business either sold or planned to be placed into run-off.”

Group Chief Financial Officer Anders Malmström added, “Having achieved our key objectives in 2025, we are well positioned to increase the payout to shareholders through an increased dividend and the launch of a substantial share buyback programme, which consists of a sustainable annual component linked to our target achievement and an additional extraordinary amount. The latter reflects our strong capital generation and position, our focus on managing the property and casualty pricing cycle, and the increased resilience of the Group.”

In P&C reinsurance, the $2.8 billion of net income is up significantly from 2024’s $1.2 billion, reflecting lower than expected large natural catastrophe losses and resilient underlying performance, Swiss Re explained.

In fact, Swiss Re’s large natural catastrophe claims only reached $813 million in 2025, with the Los Angeles wildfires and Hurricane Melissa the main drivers of that, while large man-made losses totalled $345 million.

The combined ratio in P&C reinsurance improved from 89.9% in 2024 to 79.4% in 2025, signalling strong underwriting returns.

That will have translated across into the returns third-party investors that back Swiss Re’s Sector Re reinsurance sidecar and its Core Nat Cat Fund insurance-linked securities (ILS) strategy enjoyed for 2025, given these strategies are based on quota share participation in the catastrophe underwriting portfolio, so tend to roughly follow the fortunes of the main P&C book to a degree.

At the key January 2026 reinsurance renewals Swiss Re has reported a relatively stable outcome in premium volume terms, with $12.4 billion renewed, down just -0.3% on the prior year.

“The outcome reflects continued discipline and active cycle management amid a more challenging pricing environment,” the reinsurance company explained.

Swiss Re’s P&C Re division actually achieved a headline price increase of 0.3% on that business, also citing stable terms and conditions.

But, when factoring in how the risks have changed, Swiss Re said that after taking a prudent view on inflation and updated loss models, loss assumptions for the renewed business had increased by 4.6%, driving a net price decrease of 4.3% on the January renewal book.

Ultimately, Swiss Re said the January renewal book is aligned with its P&C Re combined ratio target of sub-85% for 2026.

With the strong performance, Swiss Re has been able to surprise investors by announcing higher capital returns for its shareholders, in the wake of a very profitable year.

Major reinsurers are returning capital at pace again, but analysts from Jefferies have noted today that Swiss Re’s addition of an extraordinary buy-back of $1 billion on top of the expected $500 million, means its capital return yield is around 7.7% which is among the highest in the market.

The capital returns being seen are, as ever, remarkable reflections of reinsurance sector profits, often witnessed at this stage of the cycle.

Another signal being seen is the desire to retain more of the economics of the underwritten business, something we commented on yesterday in relation to Munich Re.

Like that reinsurer, Swiss Re has also reduced its use of external catastrophe retrocessional protection for 2026.

Swiss Re said this morning that its net natural catastrophe exposures have risen slightly as a result of purchasing less natural catastrophe retrocession at the January 2026 renewals.

Unfortunately Swiss Re does not go into any detail about where it has reduced its retro protection arrangements, so we’re not aware at this stage how this might have affected the reinsurer’s use of aligned third-party capital in its sidecars, or whether the reduction has purely been in direct transactions with retrocessionaires.

It is worth noting that Swiss Re came back to the catastrophe bond market earlier this year as part of its external retrocession, securing $150 million of aggregate and subsequent event retro reinsurance covering North American peak perils from a Matterhorn Re Ltd. (Series 2026-1) deal.

Swiss Re cites the reduction in external nat cat retro as one driver for a slightly lower Swiss Solvency Test (SST) ratio at January 1st, although the SST ratio does remain at 250% which is the very top of its target range.

Within the SST calculation, P&C risk has added 0.7% to the calculation at January 1st, which Swiss Re said “mainly reflects lower external nat cat retrocession,” so it’s far from a significant contributor to that metric it seems.

As we said in our article yesterday about Munich Re’s slashing of its retrocession arrangements, which came with far more detail, it does feel like at this stage of the reinsurance market cycle major players want to exert their ability to generate as much in earnings from underwritten business, keeping more of the economics for themselves.

A reduction in external retrocession will naturally do this, while it’s also worth considering that aligned third-party capital structures, such as sidecars and ILS funds, allow for fee income to be generated, which a standard retro trade that transfers risk to a counterparty will not do that.

These large reinsurers have significant optionality across direct external retro trades, aligned vehicles, investor partnerships and more, when it comes to managing their peak natural catastrophe exposures.

At this stage of the market cycle, where pricing remains elevated in reinsurance compared to previous low-points of soft markets, it is perhaps natural to have an ambition to maximise the profit you can generate off every unit of risk underwritten.

It is interesting though, to note a divergence among major reinsurance firms, as Hannover Re had demonstrated an appetite for more retrocession at the January renewals, compared to Swiss Re and Munich Re cutting back on external protection.

Which will make for interesting analysis when the market faces meaningful catastrophe losses, which it inevitably will in time, as retro strategies now diverge and as a result we could see increasingly different outcomes when the reinsurance market faces its next nat cats.

Read more on Swiss Re’s annual results over at our sister publication Reinsurance News.