Reinsurance giant Swiss Re has reported a net loss of $248 million for the first-quarter of 2022, as losses related to the pandemic continued, as well as impacts from the war in Ukraine and natural catastrophes.
The net loss compares with net income of $333 million in Q1 2021, as the annualised return on equity fell from 5.2% to -4.6% this year.
Across its property and casualty (P&C) business, Swiss Re absorbed higher-than-expected large natural catastrophe claims during the quarter of $449 million, up from $316 million last year, and mostly attributable to February storms in Europe and flooding in Australia. In addition, Swiss Re reserved $154 million in relation to the war in Ukraine.
All in all, P&C Re has reported net income of $85 million in Q1 2022, compared with $481 million a year earlier, which the firm says reflects the robust technical performance of the business as well as lower investment results, and the losses related to Ukraine and nat cats.
The segment’s combined ratio weakened to 99.3% in Q1 2022 from 96.6% in Q1 2021. However, net premiums earned grew by almost 6%, year-on-year, to $5.3 billion, driven by continued price improvements as well as P&C Re’s sustained focus on active portfolio management, partially offset by adverse foreign exchange developments.
Commenting on its experience at the April 1st, 2022, reinsurance renewals, Swiss Re notes that P&C Re renewed contracts with $2.4 billion in treaty premium volume, which represents a 15% increase compared with the business that was up for renewal. Since the start of the year, Swiss Re says that P&C Re has achieved treaty premium volume growth of 8% and a price increase of 3%, which covers more conservative loss assumptions.
Within its Life & Health reinsurance business, Swiss Re has reported a loss of $230 million for Q1 2022, against a loss of $193 million a year earlier. The loss reflects claims related to the pandemic of $501 million and lower investment results.
The reinsurer says that COVID-19 claims in the first quarter of 2022 were at the higher end of expectations, resulting from the persistently high mortality rates in the US in the first two months of the year.
Also in L&H Re, net premiums earned and fee income declined slightly by 1.7% to $3.8 billion, driven by adverse foreign exchange developments as well as one-off effects from an accounting reclassification.
Despite the challenging start to the year for L&H Re, the firm still targets net income of roughly $300 million for 2022 as excess mortality in the US trends down.
In Corporate Solutions, Swiss Re has reported net income of $81 million, compared with $96 million a year earlier. The positive result was achieved despite Swiss Re booking reserves related to the war in Ukraine of $129 million, and significantly lower investment results. Swiss Re CorSo also absorbed large natural catastrophe losses of USD 75 million, mainly driven by the flooding in Australia and the European winter storms in February.
The division’s net premiums earned increased by more than 14% to $1.4 billion in Q1 2022, while the combined ratio reached 95.2%.
Swiss Re’s Group Chief Executive Officer (CEO), Christian Mumenthaler, commented: “The first quarter turned out to be a challenging one. Russia’s invasion of Ukraine came as a shock, and our thoughts are with everyone impacted. While the situation remains highly uncertain and we do not believe we have an outsized exposure, we decided to take a proactive and cautious approach to establishing reserves for potential impacts from the war. Despite this and other headwinds in the quarter, Swiss Re’s property and casualty businesses delivered robust underwriting results, and we remain focused on delivering on our financial targets for the year.”
“While the first quarter of 2022 presented significant headwinds for the re/insurance industry and Swiss Re, we are confident in the Group’s ability to navigate the challenges. Thanks to the actions we have taken over the past years, our businesses have all the necessary levers in place to drive profitability and deliver against our financial targets for 2022,” he added.
Group Chief Financial Officer (CFO), John Dacey, said: “While the first quarter was impacted by negative equity mark-to-market movements, the recurring income yield remained stable at 2.1%. We expect our investment results to benefit from rising interest rates in the medium term. At the same time, the Group maintained its very strong capital position, enabling us to capture profitable growth opportunities in a supportive pricing environment.”
