IFRS 17 changes create a lot of opportunity for reinsurers to help companies deal with the entwined disruption, suggested Paul Murray, CEO of Life & Health Reinsurance, Swiss Re, speaking with CNBC.
Discussing the current outlook of the L&H reinsurance market, Murray told CNBC there are a lot of “tailwinds” at the moment, referring to the current interest rates as “very good” for Swiss Re as it carries reserves over the long term for its policyholders.
Murray went on, “Alongside that, we have had a tough period of COVID claims, we’ve paid out more than $3 billion to people in need during COVID.
“The effect of COVID, of course, is starting to decline. That’s a very strong positive tailwind for us.”
Murray also noted that there is a lot of disruption coming to the way the industry calculates its numbers under IFRS 17. According to Murray, this will “create a lot of opportunity for reinsurance to help companies deal with that disruption.”
Adding more on the ramifications of IFRS 17, he observed it will “change the way that companies report their earnings, as well as the construction of their balance sheet.”
He continued, “For us at Swiss Re Life & Health, it will be a positive change, we’ll be talking to investors more about that later this year.
“For some companies that might not be so positive. The key thing is it creates all this disruption and what reinsurance can do is provide a very effective mechanism for giving capital relief to companies to optimise their balance sheet.
“As balance sheets transforms through IFRS 17, you have this powerful tool there that enables you to fix some of the problems or to optimise some of the outcomes.”
Discussing the wider outlook for the L&H business, Murray said it’s very difficult for Swiss Re to maintain the same volumes as it could pre COVID.
However, he added, “We anticipate this year, as we start to see a bit of recovery again, and I think this is another tailwind that’s a positive for our business, we’ll see about a 1%+ in real terms growth written premiums this year around the world.
“It varies a bit by economy, it’s actually a bit flattish in advanced economies, but the Asian markets we expect will come through with very strong growth.”