Global reinsurance giant Swiss Re has reported a significant rise in net income to $1.4 billion for the first half of 2023, driven by contained natural catastrophe losses, and a solid performance in all business segments during the period.
Group-wide, net income rose substantially from the $157 million recorded in H1 2022, supported by a profit of $804 million in the second quarter of 2023.
Return on equity (RoE) jumped from 1.6% in H1 2022 to 22.8% in H1 2023, as Swiss Re reports manageable natural catastrophe losses, and a robust performance in both its life and health (L&H) business and Corporate Solutions arm.
Across the group, net premiums earned and fee income increased by more than 4% to $22.1 billion in H1 2023.
Swiss Re’s return on investments totalled 2.8% at the half year compared with 1.2% a year earlier, as the return on investment continues to benefit from higher income.
Within the reinsurer’s property and casualty (P&C) division, net income rose, year-on-year, from $316 million to $904 million on the back of a solid investment result and a low catastrophe loss experience witnessed in the second quarter.
In H1 2023, large losses from nat cats totalled $634 million compared with $938 million in H1 2022, driven by the earthquake in Turkey and Syria, Cyclone Gabrielle and flooding in New Zealand. Large man-made losses totalled $76 million in H1 2023.
P&C net premiums written increased from $10.6 billion to $11.4 billion, which Swiss Re notes is a reflection of the strong performance during renewals in both January and April.
Net premiums earned grew by 9.6% at constant foreign exchange rates to more than $11.3 billion.
Within P&C, property net earned premiums totalled more than $4 billion in H1 2023, as casualty premiums were more than $5 billion, and specialty premiums more than $2 billion.
All in all, the P&C combined ratio strengthened from 98.5% in H1 2022 to 94.7% in H1 2023. The property combined ratio strengthened from 98.8% in H1 2022 to 74.9% in H1 2023, as the specialty combined ratio improved to 76% from 90.8%, which more than offset a deterioration in the casualty combined ratio of 18 percentage points to 118.8%, which Swiss Re attributes to reserve additions in liability and motor.
At the July 1st, 2023, reinsurance renewals, Swiss Re’s P&C business renewed contracts with $4.3 billion in treaty premium volume, achieving a price increase of 21%, which more than offset higher loss assumptions of 16%.
Year-to-date, Swiss Re has 82% of treaty business renewed with a price increase of 18%, most pronounced in nat cat.
Turning to Swiss Re’s L&H segment, net income increased from $2 million in H1 2022 to $393 million in H1 2023, with the unit benefitting from significantly lower COVID-19 claims and also from higher investment income, despite elevated mortality in the U.S. winter months.
L&H net premiums earned and fee income moved from $7.5 billion to $7.8 billion in H1 2023. Swiss Re notes that its L&H division is still targeting net income of around $900 million for full year 2023.
In Corporate Solutions, net income jumped to $323 million compared with $220 million a year earlier. Swiss Re notes that this improved result was achieved despite higher man-made claims activity in the second quarter of 2023, confirming the improved resilience of the business and disciplined underwriting.
Large man-made losses totalled $113 million in H1 2023, which is down year-on-year. Large nat cat losses also fell year-on-year to $20 million.
Net premiums earned within Corporate Solutions fell from $2.9 billion to $2.6 billion in H1 2023, which reflects the partial sale of the elipsLife business in the middle of last year.
The segment’s combined ratio strengthened to 91% compared with 93.2% a year earlier.
Swiss Re’s iptiQ also grew in the quarter and first half period, with gross written premiums rising from $455 million to $476 million year-on-year. The entity now has roughly 2.2 million policies in-force.
Christian Mumenthaler, Swiss Re’s Group Chief Executive Officer (CEO), commented: “The overall result in the first half of 2023 reflects the good positioning of Swiss Re, as well as the quality of our new business. The performance of P&C Re and Corporate Solutions contributed to a solid second quarter.”
“In spite of macro-economic volatility, higher interest rates and steadily increasing recurring income contributed to an improved investment result. We have maintained our very strong capital position, which allows us to take advantage of attractive business opportunities,” commented John Dacey, Group Chief Financial Officer (CFO).
“An increased risk awareness and rising interest rates are contributing to a strong market for our industry. As we enter the second half of the year, our transition to a simpler organisational structure, which we began implementing in April 2023, is well underway. Given the positive contribution of all our main businesses, we are focused on achieving our profit target of more than USD 3 billion for the year,” added Mumenthaler.
