Swiss Re Returns to Q1 Profit With Net Income of $643M

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Swiss Re swung back to a first quarter profit, reporting net income of $643 million, compared with a loss of $248 million for the prior-year period.

“Profitability improved in all our main businesses, supported by adequate pricing, higher investment results, and cost. Discipline has helped us absorb large natural catastrophe losses and seasonally higher mortality,” said Swiss Re’s Group Chief Financial Officer John Dacey in a media call.

During the quarter, the group’s return on investments increased to 2.8%, compared with 0.7% in the prior-year period, which Dacey said was achieved during a turbulent quarter, demonstrating “the quality of our asset portfolio.”

The group’s net premiums earned and fee income during Q1 increased by 4.1% to $11.1 billion, compared with $10.6 billion reported for the same quarter last year.

The company’s Property & Casualty Reinsurance (P&C Re) business unit reported Q1 net income of US$369 million and a combined ratio of 97.2%, compared with net income of US$85 million and a combined ratio of 99.3% in the same period in 2022. (A combined ratio below 100 indicates an underwriting profit).

“Considering that the business earns the majority of its natural catastrophe premiums in the second half of the year, P&C Re confirms its full year target for a combined ratio below 95%.”

Dacey explained that the increase in net income was driven by robust price improvements as well as higher investment results.

“The business unit absorbed large natural catastrophe losses, including the earthquake in Turkey and Syria, for which we booked $426 million in net claims, as well as Cyclone Gabriel, and the flooding in New Zealand,” Dacey said, adding that total catastrophe losses were $597 million during the quarter.

To put Swiss Re’s losses from the earthquake into context, Dacey said the industry loss from that event is about $5.3 billion, although losses are still developing, and it is the most costly earthquake in Europe on record.

P&C Re renewed contracts with US$2.6 billion in treaty premium volume on April 1, 2023, said Swiss Re, noting that this represents a 5% volume increase compared with the business that was up for renewal.

“Overall, P&C rate achieved a price increase of 19% in this renewal round, more than offsetting the higher loss assumptions of 13%,” Darcy said.

The Corporate Solutions business unit reported net income of $168 million, an improvement over the $81 million reported in Q1 2022. The division’s Q1 combined ratio also improved to 90.3 from 95.2 in Q1 2022.

“The result is driven by sustainable underlying business performance due to continued disciplined underwriting, careful risk selection, and adequate pricing,” Dacey said, noting that CorSo is on track towards meeting its target of achieving a combined ratio below 94% for the full year.

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