Reinsurance News

Swiss Re targets nat cat portfolio growth in strategy update

25th November 2019 - Author: Matt Sheehan

Swiss Re has confirmed it’s strategy and targets ahead of 2020, outlining plans for profitable growth in its reinsurance segment, partly through further expansion and diversification of its natural catastrophe portfolio.

swiss reThe reinsurer also reported on the progress of its Corporate Solutions unit, which has been focused on returning to underwriting profitability.

Swiss Re said that its reinsurance business unit remains “the core engine of profitability” for the group, with the P&C Re segment continuing to perform well despite significant natural catastrophe claims in recent years.

The company plans to pursue a targeted growth strategy for reinsurance supported by portfolio steering, expanding its natural catastrophe franchise while managing exposure in casualty reinsurance.

According to Swiss Re Institute, the natural catastrophe reinsurance market is forecast to grow from £30 billion to $40 billion over the next four years, and Swiss Re sees this as a key area for expansion.

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Swiss Re has claimed back the number one spot in catastrophe reinsurance, saying that it has returned to having the largest market share again in 2019.

In September 2019 Swiss Re established its Alternative Capital Partners unit in Group Finance by combining its ILS, Retro and Syndication teams.

It plans to make use of a broad range of third-party capital vehicles via this unit to allow it to grow its natural catastrophe book while proactively keeping peak exposures within limits.

“The establishment of Alternative Capital Partners enhances our already flexible capital structure,” noted Chief Financial Officer John Dacey. “It allows us to consider all sources of capital holistically.“

In terms of casualty reinsurance, Swiss Re believes its portfolio is well diversified and prudently reserved, but is taking actions to improve profitability and manage risk to address a challenging US liability market environment.

The company also reported that the Corporate Solutions unit is making good progress with the implementation of management actions to reposition the business.

Going forward, the unit will continue to focus on transformation via the de-commoditisation of its core portfolio, selective growth with differentiating capabilities such as innovative risk solutions, and expansion through tech-driven initiatives.

Swiss Re expects to see positive price momentum continue for Corporate Solutions, with the price quality of its portfolio up 10% in the first nine months of 2019.

“Swiss Re’s strategy is centred around diversifying our access to risk pools by leveraging our risk knowledge, unique client access and capital strength,” said Christian Mumenthaler, Chief Executive Officer at Swiss Re.

“We are winning an increasing proportion of reinsurance business through our capabilities in underwriting large transactions and providing innovative solutions,” he continued.

“We are investing in research and technology to give us an edge in accessing growing risk pools, such as natural catastrophe, and drive forward our Corporate Solutions and Life Capital businesses. The Group’s superior capital strength allows us to capture such opportunities and maintain attractive shareholder returns.”

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