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COVID-19 drives Swiss Re to $225mn Q1 net loss

30th April 2020 - Author: Charlie Wood

Global reinsurance giant Swiss Re fell to a $225 million net loss in the first quarter, as the coronavirus pandemic continues to make its presence felt in the industry.

Swiss ReThe reinsurer also saw an underwriting loss of $476 million and an investment loss of $300 million for the quarter.

The mark-to-market valuation of recently-acquired Phoenix Group Holdings also adversely impacted its performance for the quarter.

“The COVID-19 pandemic has had a deep impact on society, governments and businesses across the globe,” said Swiss Re Group Chief Executive Officer Christian Mumenthaler.

“Our heartfelt sympathies go to those who have lost a loved one or have otherwise suffered in the crisis. These difficult times reinforce our resolve to continue working towards Swiss Re’s vision –making the world more resilient.”

L&H Re reported a net income of $299 million and saw no COVID-19 claims impact emerge in the quarter.

P&C Re reported a net income of $61 million for the quarter, up from $13 million in the same period of 2019.

Swiss Re says the business remained profitable despite charges related to COVID-19 and natural catastrophes.

The COVID-19 crisis impacted the unit’s performance by $253 million as reserves were established primarily for expected claims for cancelled or postponed events.

P&C Re’s net premiums earned increased strongly by 12% to $4.7 billion and annualised ROE was 3.0% compared with 0.6% in the first quarter.

Excluding the impact from COVID-19, the ROE was 13.2%. The reported combined ratio was 110.8%.

Corporate Solutions reported a net loss of $167 million for the quarter, as reserving for claims related to the COVID-19 crisis totalled $223 million.

The group says most of these losses are reserves posted for anticipated claims related to event cancellations, a line of business Corporate Solutions decided to exit in the restructuring announced last year.

Excluding The COVID-19 impact, Corporate Solutions’ combined ratio was 103.2%, 13 percentage points better than the reported ratio one year ago.

Asset Management was responsible for a US GAAP net valuation loss of approximately $300 million.

Group ROI was 3.2% for the quarter, while the running yield declined to 2.5%, reflecting the unprecedented low-yield environment.

Swiss Re’s Group Chief Financial Officer John Dacey, added, “We took timely and substantial measures to protect our balance sheet and hedge investment positions in the first quarter, ahead of one of the sharpest sell-offs in recent history.

“This allowed us to largely mitigate the negative impacts of market turbulence, and the low impairments in our portfolio underscore its quality. As markets remain volatile, we continue to be vigilant to the challenges the current conditions present.“

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