Global reinsurer Swiss Re generated a net income of $2.2 billion and $102 million for the first nine months and third quarter of 2024, respectively, despite the previously announced addition of $2.4 billion to its prior year US liability reserves.
Swiss Re announced earlier this month that it strengthened its property and casualty reinsurance (P&C Re) reserves by an additional $2.4 billion in the third quarter of 2024, taking total reserve additions for 9M 2024 to $3.1 billion, partially offset by releases in other lines, resulting in net prior year reserve strengthening of $2 billion in the quarter.
The reinsurer states that this strengthening has “accelerated the achievement of the Group’s goal to position overall
P&C reserves at the higher end of the best-estimate range,” while the establishment of an uncertainty allowance on new business is designed to support the strength of the firm’s reserves in the future.
“Enhancing the overall resilience of the Group has been a key priority for the management team. With the decisive actions in the third quarter, which follow a comprehensive review, we have reached our goal of positioning overall property and casualty reserves at the higher end of the best-estimate range,” said Swiss Re’s Group Chief Executive Officer, Andreas Berger.
But despite the significant reserve additions in the first nine months of the year, Swiss Re’s P&C Re arm still delivered net income of $603 million for 9M 2024, driven by the strong current year underwriting performance.
In fact, P&C Re’s insurance service result, which reflects profitability of the underwriting activity, totalled $1 billion in 9M 2024 with a combined ratio of 92.8%. The reserve strengthening added 13.3 percentage points to the combined ratio, and as a result, Swiss Re has confirmed that the segment is now not expected to hit its combined ratio target of less than 87% for 2024.
Large natural catastrophe events also impacted the P&C Re segment in the period, with total claims of $813 million, of which $743 million is attributable to the third quarter. The claims mostly relate to the severe hailstorm which affected Calgary, Canada, Storm Boris in Europe, and hurricanes Debby and Helene in the US.
The P&C Re segment’s insurance revenue for the nine month period was $15 billion.
Within its life and health reinsurance (L&H Re) division, net income hit $1.2 billion for 9M 2024, which reflects strong investment income and healthy in-force margins. The reinsurer notes that during the period, US mortality experience remained slightly favourable relative to expectations, offset by unfavourable developments mainly in EMEA.
All in all, L&H Re delivered net income of $12.6 billion and an insurance service result of $1.2 billion for 9M 2024. Swiss Re still expects the unit to target net income of $1.5 billion for full year 2024.
In Corporate Solutions, the firm’s commercial insurance business, net income for 9M 2024 was $642 million, driven by a robust underlying business performance and solid investment income. Insurance revenue in 9M 2024 hit $5.8 billion, as large nat cat claims totalled $294 million, driven by tropical cyclone Megan in Australia, hurricane Helene in the US, and the Calgary hailstorm.
The Corporate Solutions arm generated an insurance service result of $739 million and a combined ratio of 89.4% for 9M 2024, and is well on track to hit its combined ratio target of less than 93% for the full year.
Regarding iptiQ, Swiss Re notes that the withdrawal is going ahead as planned, pointing to its announcement on November 5th that the digital insurer’s European P&C business is being sold to Allianz Direct. The business produced a loss of $241 million for 9M 2024, including one-off impairments of goodwill and intangibles of $111 million related to the withdrawal from the business announced in May.
All of the above resulted in Group net income of $2.2 billion and an ROE of 13.4% for 9M 2024. The Group’s insurance revenue hit $33.7 billion, and the insurance service result totalled $2.9 billion.
Swiss Re achieved a return on investments of 3.9% in the nine month period, which the carrier attributes to a continued strong contribution from recurring income.
“All our Business Units continue to deliver attractive underlying performance thanks to disciplined underwriting and capital allocation. This is further supported by a significant positive contribution from investment income,” said Swiss Re’s Group Chief Financial Officer, John Dacey.
Assuming normal loss activity for the rest of the year, Swiss Re expects to generate net income of more than $3 billion for 2024. Looking ahead to Q4, and Swiss Re anticipates losses from hurricane Milton to be under $300 million.
“The significant strengthening of reserves in the third quarter creates a resilient base for success in the coming years. The Group’s capital position remains strong, putting us in a favourable position for the upcoming renewals. We expect to update the market with new targets for 2025 next month,” said Berger.
