In an interview with CNBC, Swiss Re CFO John Dacey said the firm won’t retreat from California despite recent wildfires, emphasising its ability to price the risk effectively and support insurers, just as it does in Florida’s private residential market.
When asked by CNBC if Swiss Re plans to withdraw from California following the destructive LA wildfires, the executive noted that it does not expect to pull back. Instead, the firm aims to assess the events, verify its loss models, and ensure they align with the conditions observed in the state in January 2025.
Dacey added, “We think we can, in fact, price this risk well. We think we can support the primary companies that are offering insurance in the State of California in the same way we can support insurers that offer private residential insurance in the State of Florida. We just need to be sure the pricing is adequate.”
CNBC then asked whether Swiss Re would expand its coverage, given its continued profitability based on combined ratios.
“At the January 1 renewals, that’s exactly what we did. Premiums are up 7%, and that includes all levels of business, with the exception of US liability, which is an area in which we’re still concerned that the pricing is not adequate for Swiss Re and, frankly, for the industry,” Dacey explained.
He continued, “But in all the property, all the natural catastrophe layers that we operate in today, we think the pricing is adequate. We’ll continue to view the models. We mentioned that the price increases year on year were up about 2.8%.
“We also think our loss costs were up even more than that, about 4.2%. So, there’s a margin squeeze a little bit for us in 2025, but we still think that this business is profitable. And to your point, the underlying earnings in P&C Re and Corporate Solutions, our two P&C businesses, are robust.”
Swiss Re generated a net income of $3.2 billion in 2024, up roughly 3% from 2023’s $3.1 billion, driven in part by disciplined underwriting of new business as the firm’s underwriting profit declined by approximately 9% to a still strong $4.3 billion.
It currently estimates losses from the LA wildfires to be less than $700 million, which Dacey confirmed is more than a third of its full year 2025 budget for natural catastrophes of €2 billion.
