Swiss Re, one of the world’s largest reinsurance companies, has today reported net income of $643 million for the first quarter of 2023 compared with a loss of $248 million a year earlier, as the firm’s property and casualty (P&C) reinsurance combined ratio improved despite elevated nat cat activity.
Group-wide, net premiums earned and fee income jumped by 4.1% to $11.1 billion in Q1 2023, while the return on equity improved significantly to 19.1%, and the return on investments strengthened to 2.8%, compared with -4.6% and 0.7%, respectively, in Q1 2022.
“The first-quarter results demonstrate the resilience of all our main businesses, supported by adequate pricing, higher investment returns and cost discipline,” said Christian Mumenthaler, Swiss Re’s Chief Executive Officer (CEO).
Within P&C reinsurance, net income jumped from $85 million to $369 million, which Swiss Re says is in spite of large natural catastrophe claims, driven mostly by the earthquake in Turkey and Syria at a cost of $426 million, based on a market loss of $5.3 billion. Cyclone Gabrielle and flooding in New Zealand were also drivers of the large nat cat bill in Q1 2023.
The segment’s combined ratio amounted to 97.2% for Q1 2023 compared with 99.3% a year earlier. Swiss Re’s P&C reinsurance business has confirmed its full-year target of achieving a combined ratio of under 95%, as it earns most of its natural catastrophe premiums in H2.
Net P&C Re premiums earned increased by 8.5% to $5.8 billion versus $5.3 billion a year earlier.
Swiss Re attributes the substantial rise in net income to “robust price movements” and also higher investment results.
At the April 1st reinsurance renewals, P&C Re renewed contracts with $2.6 billion in treaty premium volume, which represents a 5% volume increase compared with the business that was up for renewal. All in all, P&C Re achieved a price increase of 19% at the April renewals, which more than offset higher loss assumptions of 13%.
Within the company’s life and health (L&H) reinsurance business, net income reached $174 million, compared with a loss of $230 million a year earlier. Swiss Re highlights a strong decline in COVID-19 claims and also higher investment income.
Net premiums earned and fee income remained unchanged, year-on-year, at $3.8 billion.
Considering the seasonally elevated mortality during the winter months, Swiss Re’s L&H Re confirms its target to achieve net income of approximately $900 million for 2023.
Turning to Corporate Solutions, and net income increased from $81 million to $168 million, driven by a sustainable underlying business performance on the back of continued discipline underwriting, careful risk selection, and adequate pricing.
However, net premiums earned fell slightly from $1.4 billion to $1.3 billion, which reflects the partial sale of elipsLife business in mid-2022. The segment’s combined ratio was 90.3% for Q1 2023, so on track to achieve the target combined ratio of 94% for the full year.
Finally, at iptiQ, gross premiums written fell by 5.2% to $218 million, which Swiss Re attributes to a shift in business mix to achieve profitability.
“The return on investments of 2.8% that we achieved in a turbulent quarter demonstrates the quality of our asset portfolio. On the liability side, we absorbed multiple large losses, while maintaining underwriting profitability,” said Swiss Re’s Group Chief Financial Officer (CFO), John Dacey.
“In an uncertain macroeconomic environment, we continue to focus on achieving our ambitious profit target of more than USD 3 billion for the Group in 2023. The successful P&C Re renewals so far this year and a good start in L&H Re and Corporate Solutions underpin our confidence, supported by rising interest rates, cost discipline and a very strong capital position. Swiss Re also successfully transitioned to a new structure as of April 2023, creating a simpler and nimbler organisation and bringing us closer to clients,” added Mumenthaler.
