Global reinsurer, Swiss Re ahead of its transition from US GAAP to the IFRS accounting standard, has set a new IFRS target for net income of more than $3.6 billion for 2024.
Simultaneously, the Life & Health Reinsurance segment is expected to contribute a net income of $1.5 billion, towards the target.
While its Property and Casualty (P&C) Reinsurance segment will target a reported combined ratio of less than 87%.
Corporate Solutions targets an IFRS-reported combined ratio of less than 93% for 2024, and the reinsurer has set a multi-year IFRS ROE target of more than 14%.
Christian Mumenthaler, Swiss Re Group Chief Executive Officer, commented: “Our hard work to increase earnings resilience is paying off with significantly improved profitability in all of our core businesses.
“Swiss Re is well positioned to benefit from the more economic view provided by the IFRS accounting standard, which is reflected in the targets published today.”
According to the company, the transition from US GAAP to IFRS provides it with an opportunity to demonstrate the value of its business.
The new accounting basis is expected to have a positive impact on the bottom line by better reflecting L&H Re’s earnings power, and on its balance sheet by eliminating systemic accounting mismatches under US GAAP. Resulting in the shareholders’ equity position will be significantly higher.
The announced financial targets reflect Swiss Re’s objective to be sustainably positioned at the higher end of the best estimate reserving range across its P&C businesses.
This will be supported by introducing a reserving uncertainty allowance for new business, the implementation is expected to negatively impact profit after tax in 2024 of approximately $0.5 billion.
Swiss Re maintains its capital management priorities and aims to return to sustainable dividend growth. The Group’s robust SST ratio of 314%4 will not be materially affected by the change in accounting standard.
Swiss Re will report under IFRS as of 2024: Compared to US GAAP, IFRS-reported combined ratios reflect discounting of claims and certain methodological differences.
Compared to P&C Re, Corporate Solutions’ IFRS-reported combined ratio definition reflects lower discounting and methodological benefits. The impact expected to come from new business uncertainty allowances affecting the 2024 current year result in P&C Re and Corporate Solutions. As of 1 July 2023.
