Swiss Re Corporate Solutions fall to $323m 9 month loss

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Swiss Re Corporate Solutions fell to a $323m nine-month loss as Covid-19 cost $678m, but its parent group was keen to stress that the turnaround at its primary insurance unit is “gathering momentum” and underlying results show improvement.

Meanwhile, Swiss Re group posted a $691m let loss for the first nine months of this year, although it reduced its deficit on Q2 after achieving net income of $444m in the third quarter. This compares to net income of €1.3bn for nine months last year.

Swiss Re saw Covid-19 losses increase by $500m in the third quarter to total $3bn for the year so far.

Swiss Re Corporate Solutions’ $323m nine-month loss might not look that impressive but remains an improvement on the $441m recorded in the same period last year. Its 2020 combined ratio stands at 118.7 percent, compared with 127 percent a year ago.

While these results are far from what Swiss Re would have liked, it seems happy with an improvement at Corporate Solutions once Covid-19 losses are not taken into account.

The unit would have delivered net income of $221m and a combined ratio of 96 percent. The latter is significantly ahead of the unit’s 105 percent estimate for 2020 that was set as it attempted to turn around poor performance. Return on equity would have stood at 12.3 percent

Swiss Re said the nine-month performance reflects the “benefits of management actions announced in 2019, including achievement of more than 70 percent of the planned portfolio pruning”.

More than half of Swiss Re Corporate Solutions’ pandemic losses were reserves for anticipated claims related to event cancellations, a line of business it exited in 2019. The remainder of the losses came mainly from property and credit and surety claims.

Net premiums earned were 3.6 percent lower at $3bn, as active portfolio pruning was cushioned by rate improvements of 15 percent for the first nine months of 2020.

In addition to the hit taken by Swiss Re Corporate Solutions, some $1.6bn Swiss Re’s total $3bn Covid-19 loss fell on reinsurance business, with $689m on life and health reinsurance.

Swiss Re said uncertainty surrounding many factors related to the pandemic remains high and could impact claims developments in the coming quarters positively or negatively, relative to its projections.

Swiss Re’s P&C reinsurance business posted a $201m loss for the first nine months and a combined ratio of 110.3 percent. This compares to net income of $880m and a combined ratio of 101.4 percent a year earlier. Without Covid-19, it would have achieved net income of $1bn.

The firm said the numbers were supported by “strong recent renewals”. Large natural catastrophe and man-made losses amounted to $1.5bn for the first nine months of 2020. Natural catastrophe events in the third quarter were “above expectations”.

Group CEO Christian Mumenthaler said: “Swiss Re is well equipped to benefit from an improving market environment. Our capital position is very strong, allowing us to pursue profitable growth as prices develop favourably across both our P&C Re and Corporate Solutions businesses.”

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