Swiss Re reports 23% increase in net income for the first nine months of 2019, supported by growth in Reinsurance

- Group net income of USD 1.3 billion, up from USD 1.1 billion

- Property & Casualty Reinsurance (P&C Re) net income up 39% to USD 880 million; combined ratio of 101.4%; return on equity (ROE) of 11.8%

- Life & Health Reinsurance (L&H Re) delivered strong result with net income of USD 651 million and ROE of 11.8%

- Corporate Solutions net loss of USD 441 million reflects decisive management actions and medium-sized and large man-made and natural catastrophe claims

- Life Capital net income of USD 40 million; gross cash generation of USD 831 million bolstered by exceptional items

- Excellent return on investments (ROI) of 4.3%; stable running yield at 2.9%

- Group Swiss Solvency Test (SST) ratio remains very strong at 241% (1 July 2019 estimate)

Swiss Re reported a Group net income of USD 1.3 billion in the first nine months of 2019, an increase of 23% from USD 1.1 billion for the same period a year earlier, supported by growth in Reinsurance and an excellent investment result. While the Group’s property and casualty businesses were impacted by USD 1.7 billion in large claims from natural catastrophes and man-made events, the life and health businesses continued to deliver a strong performance. Net premiums earned and fee income rose by 10% year-on-year to USD 28.4 billion, driven in particular by growth in P&C Re premiums. The Group’s ROE was 6.0%, and its capital position remained very strong.

Swiss Re’s Group Chief Executive Officer Christian Mumenthaler said: “The strength of our business with its global reach, diversification and very strong capitalisation enabled us to react fast and support our clients and their customers affected by the large natural catastrophes and man-made events in the first nine months. Our Reinsurance Business Unit achieved profitable growth in a challenging market environment. The transformation of Corporate Solutions is underway, and we continue to benefit from robust gross cash generation in Life Capital. Our leading market position and positive rate dynamics year to date give us confidence for the upcoming renewal season.“

Swiss Re reported an ROI of 4.3% in the first nine months of 2019, up from 2.8% in the same period a year earlier. The increase reflects a strong equity market performance, including a significant gain from the sale of the Group’s investment in the Brazilian insurance group SulAmérica S.A., as well as gains within the fixed income portfolio. The Group’s fixed income running yield for the nine-month period remained stable at 2.9%, despite headwinds from the declining yield environment.

Swiss Re maintains a very strong capital position, with a Group SST ratio of 241% (1 July 2019 estimate), exceeding its 220% target. The decline from 251% as of 1 January 2019 reflects capital deployment into profitable growth, expected capital repatriation to shareholders and lower interest rates, partly offset by positive earnings contributions.
In light of the capital deployment, significant natural catastrophe losses in 2019, and the decision to suspend the initial public offering of ReAssure, the Board of Directors has decided that the second tranche of the public share buy-back programme will not be launched. The first tranche of the public share buy-back programme of up to CHF 1.0 billion purchase value, which started on 6 May 2019, is well on track, with more than 60% already completed as of 30 September 2019.

Swiss Re’s Group Chief Financial Officer John Dacey said: “The Group’s results in the first nine months underline the strength of our franchise. Despite multiple large natural catastrophe and man-made claims affecting the business, our capital position remains very strong, allowing us to take advantage of growth opportunities in an improving pricing environment.“

P&C Re supported by profitable growth and strong investment performance

P&C Re reported a 39% increase in net income for the first nine months to USD 880 million, supported by profitable business growth and a strong investment performance. Net premiums earned increased 17% to USD 14.2 billion, driven by large transactions and growth in the natural catastrophe business. The ROE improved to 11.8% from 8.3%. The combined ratio was 101.4%. P&C Re continues to be on track to achieve a normalised combined ratio of 98%1 in 2019.

The underwriting performance was impacted by USD 1.1 billion of large claims from natural catastrophes in the current year, including approximately USD 460 million from Typhoon Faxai in Japan and approximately USD 300 million from Hurricane Dorian in the Atlantic. Swiss Re estimates total insured market losses at approximately USD 7 billion for Typhoon Faxai and approximately USD 4.5 billion for Hurricane Dorian. Estimated claims from large man-made events amounted to approximately USD 310 million and included losses stemming from the Ethiopian Airlines crash and the subsequent grounding of the Boeing 737 MAX fleet and the compulsory liquidation of Thomas Cook. The underwriting performance was also impacted by late claims development from Typhoon Jebi in the first quarter, in line with a material increase in the total market loss.

L&H Re continues to deliver strong results

L&H Re delivered stable net income of USD 651 million for the nine months, driven by active portfolio management actions and improved mortality developments in the Americas. The result was also supported by a strong investment performance. ROE was 11.8%, in line with the business segment’s target range. Net premiums earned and fee income remained stable at USD 9.5 billion. This includes the impact of unfavourable foreign-exchange rate movements and the termination of an intragroup retrocession agreement with Life Capital. Adjusted for these two items, net premiums earned increased by 5.6%.

Corporate Solutions results reflect decisive management actions and medium-sized and large man-made and natural catastrophe claims

Corporate Solutions reported a net loss of USD 441 million and a combined ratio of 127.0%. The result was impacted by the decisive management actions to reposition the business as announced on 31 July 2019 as well as medium-sized and large claims. Large man-made and natural catastrophe losses of approximately USD 290 million for the nine-month period include significant claims from Hurricane Dorian and the compulsory liquidation of Thomas Cook in the third quarter.

Net premiums earned increased by 7.6% to USD 3.1 billion, as growth in property and credit lines and rate increases more than offset the impact from active pruning of several underwriting portfolios. Corporate Solutions is making progress in actively reducing risk exposure in specific lines of business to ensure a more focused and profitable portfolio going forward. Swiss Re expects the positive momentum in commercial insurance rates to continue after achieving a broad-based 10% price quality increase in the first nine months of 2019.

Life Capital reports strong closed book performance and dynamic growth in the open book businesses

Life Capital reported net income of USD 40 million in the first nine months of the year, benefitting from strong performance of the closed books, partly offset by expenses from investments in growth of the open book businesses. The exceptional gross cash generation of USD 831 million was bolstered by the sale of subordinated bonds issued by ReAssure and proceeds from the sale of a 10% stake in ReAssure to MS&AD Insurance Group Holding Inc., partially offset by significant unfavourable impacts from market movements and the ReAssure recapitalisation.

Net premiums earned and fee income rose to USD 1.6 billion, driven by growth in the open book businesses and changes to intragroup retrocessions. Gross premiums written of the open books increased 21% year-on-year when measured at constant exchange rates.

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