Global reinsurance giant Swiss Re has reported net income of USD 1.3 billion for the first nine months of 2021, driven by the strong performance of its property and casualty (P&C) segment which more than offset a COVID-driven loss within its life and health (L&H) business.
Overall, Group net income increased significantly from the loss of USD 691 million reported for the same period last year, and this is despite a high level of losses from natural catastrophe events and the pandemic.
The reinsurer has reported a return on equity (RoE) of 6.6% for the nine month period, while net premiums earned and fee income for the Group increased by 5.9% to USD 32 billion.
Swiss Re’s strong performance so far in 2021 has been driven by its P&C operation, which has produced a net income of USD 1.5 billion for the first nine months of this year, compared with a loss of USD 201 million in the prior year period.
Within P&C, net premiums spiked by 6% to USD 16.4 billion for 9M 2021, which reflects continued price momentum and also favourable foreign exchange developments.
At USD 1.7 billion, Swiss Re says that large natural catastrophe losses for 9M 2021 came in higher than expected, but remained below the premiums earned for this class of business.
P&C losses mainly relate to hurricane Ida in the U.S. and the July flooding in Europe, as well as the impacts of Uri in the first quarter of the year. Additionally, Swiss Re has booked man-made losses of USD 272 million for the first nine months of the year.
While COVID-19 losses within P&C have declined considerably in 2021 for Swiss Re, this still amounts to USD 101 million, with USD 54 million of losses in event cancellation, USD 34 million of losses in business interruption, USD 18 million in other lines, and a benefit of USD 5 million in credit & surety.
In spite of the experience of elevated nat cat losses and lower pandemic losses, Swiss Re’s P&C division’s combined ratio strengthened from 110.3% in 9M 2020 to 97.5% in 9M 2021.
In L&H, the performance improved year-on-year but still remains negative with Swiss Re announcing a net loss of USD 62 million for the unit in 9M 2021, compared with a net loss of USD 72 million for the prior year period.
This decline is a result of higher COVID-19 claims of USD 1.2 billion in the first nine months of 2021, primarily originating in the U.S. Interestingly, Swiss Re explains that despite the COVID impact, L&H did actually produce a positive net income in both the second and third quarters of 2021.
Within L&H, net premiums earned and fee income jumped by more than 10% year-on-year to USD 11.1 billion, supported by large transactions, and also favourable foreign exchange developments.
When the impact of the pandemic is removed from the equation, Swiss Re’s L&H division’s underlying business performed well in 2021, increasing net income by not far off 50%, year-on-year, to USD 899 million with a return on equity of 17.5%.
Swiss Re’s Group Chief Executive Officer (CEO), Christian Mumenthaler, said: “Thanks to the Group’s sustained focus on portfolio quality and disciplined underwriting, our property and casualty businesses delivered excellent results in the first nine months of 2021. At the same time, we were able to support communities impacted by natural catastrophes and the COVID-19 pandemic.”
The reinsurer’s Group Chief Financial Officer (CFO), John Dacey, added: “P&C Re and Corporate Solutions are delivering on their ambitious targets for this year, with a combined net income of just below USD 2 billion in the first nine months. We are also pleased with the underlying performance of L&H Re, which offset the impact from the pandemic, resulting in a reported profit for the second consecutive quarter.”
Turning to Corporate Solutions, and Swiss Re has revealed net income here of USD 425 million for 9M 2021, which is a marked improvement on the loss of USD 357 million for the same period last year.
The improved performance came despite losses from natural catastrophes of USD 286 million, mainly driven by Uri and Ida in the U.S., as well as large man-made losses of USD 212 million for the first nine months of 2021.
The Corporate Solutions unit saw net premiums earned increase by 6.2% to USD 3.9 billion in the period, as the segment reported a combined ratio of 91.1% for 9M 2021, compared with an unprofitable 116% a year earlier.
At Swiss Re’s iptiQ growth has continued in the first nine months of the year, with gross premiums written for the core business rising by 118% to USD 520 million.
“We continue to reap the benefits of our strategic underwriting actions and see opportunities across all businesses to deploy capital at attractive returns. This gives us confidence for the remainder of the year and into 2022, with all our businesses well positioned to continue their strong performance,” said Mumenthaler.
