Analysts at Deutsche Bank are predicting that Swiss Re will deliver “another set of underwhelming numbers” for the first quarter of 2021, following an active period for catastrophe losses, with Barclays estimating a loss of $368 million.
Assuming an industry loss of $15 billion for the winter weather that affected Texas, with an estimated 40% falling to reinsurers, Swiss Re could be set to incur $500-600 million of losses from just this one event, based on its 11% market share of US nat cat reinsurance.
Added to this, Deutsche Bank warns of the potential for another $100 million of losses from the flooding in Australia and an earthquake in Japan.
These line up with numbers from Barclays, which estimate that Swiss Re will book $700 million of catastrophe losses on the P&C reinsurance side of its business over Q1.
Barcalys also models $300 million of COVID losses for the business, and $100 million of cat losses for Swiss Re CorSo, as well as $35 million of COVID losses.
Deutsche bank acknowledged that COVID and the Suez Canal blockage will likely impact Swiss Re to some extent, but said that these losses could largely be offset by underlying benign claims frequency trends.
On the life and health (L&H) side, both Deutsche Bank and Barclays estimate that Swiss Re will take $400 million of additional claims in Q1, based on around 200,000 excess deaths from COVID in the quarters.
Away from the underwriting, it’s though that Swiss Re’s equity portfolio should have benefitted from favourable markets in the quarter, as will have the Principle Investment portfolio.
However, the latter may have been broadly offset by the usual quarterly charges/costs within group items as well as the new inclusion of various elements from the old Life Capital division, Deutsche Bank says.
Barclays concluded that Swiss Re’s strong capital position, dominant global market position and diversified business model should enable it to “navigate the cycle better than most”, while the relatively high risk appetite should help the company benefit from harder P&C market pricing.
