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Swiss Re’s Q1 net income hits $333m despite over $1bn of COVID & cat losses

30th April 2021 - Author: Luke Gallin

Global reinsurance giant Swiss Re has reported net income of $333 million for the first quarter of 2021 against a loss of $225 million in the prior year period, despite losses related to COVID-19 and large natural catastrophes of more than $1 billion.

Swiss ReAlongside growth in net income across the Group, the reinsurer has also reported growth in net premiums earned and fee income to more than $10.2 billion.

However, the ongoing pandemic and large catastrophe events had an adverse impact on the firm’s performance during the opening quarter of the year, notably on the life side of the business.

Starting with P&C Re; the segment reported net income of $477 million in Q1 2021 compared with $61 million a year earlier, driven by continued price improvements and disciplined underwriting.

Within P&C Re, large natural catastrophe losses amounted to $316 million, primarily as a result of winter storms in the U.S. Swiss Re says that excluding the impact of the pandemic, P&C Re’s net income reached $509 million in Q1 2021.

RMS

Strong new business growth during 2020 saw P&C Re’s net premiums earned increase by 5.7% to $5 billion.

Despite impacts from COVID-19 and large nat cat losses above-expectation, P&C Re has reported an ROE of 21.6% and a combined ratio of 96.5%.

Commenting on P&C Re’s experience at the recent April 1st, 2021 renewals season, Swiss Re notes that the unit renewed treaty contracts with $2.6 billion in premium volume.

“This represents a 20% increase in volume compared with the business that was up for renewal, reflecting attractive transaction opportunities and pricing. P&C Re achieved a nominal price increase of 4% in this renewal round, more than offsetting lower interest rates and higher loss assumptions,” says Swiss Re.

Somewhat offsetting the robust performance of its P&C Re business in the period, Swiss Re’s L&H Re segment has reported a net loss of $184 million for Q1 2021.

The main driver of the loss is a substantial $570 million of losses related to the COVID-19 pandemic, driven by higher mortality rates in the U.S. and other countries.

“In the US, the first three months of 2021 saw the highest mortality since the start of the pandemic, with more than 200 000 reported deaths from COVID-19. Since March, the average daily mortality has significantly declined as vaccination efforts progress,” explains Swiss Re.

Overall, Swiss Re has reported $643 million of Q1 COVID-19 losses, of which $585 million relates to mortality claims and reserves. Event cancellation business accounts for an additional $18 million of the total, while the business interruption impact stands at $31 million for the period.

“The start of 2021 has seen record numbers of COVID-19-related deaths in many countries, and our thoughts go out to those who have lost a loved one. The devastating human toll of the pandemic is also reflected in the financial results of Swiss Re as the world’s largest life and health reinsurer. As we continue to support our clients and communities affected by the pandemic, the underlying performance of all our businesses remains very strong and underpins our confidence,” said Swiss Re’s Group Chief Executive Officer (CEO), Christian Mumenthaler.

In Corporate Solutions, Swiss Re has announced net income of $96 million for the first quarter of 2021 compared with a net loss of $166 million in the prior year period.

The segment’s ROE hit 16.2% and the combined ratio 96%, despite elevated catastrophe losses of $110 million.

Swiss Re’s Group Chief Financial Officer (CFO), John Dacey, commented: “The return to profitability this quarter in our property and casualty businesses underlines the earnings potential of our diversified business model. We effectively absorbed the heightened mortality impact on our life and health business and maintained a very strong capital position.”

“We have seen a solid start to 2021 and expect all our businesses to continue delivering a strong underlying performance with diminishing COVID-19 losses. I am particularly encouraged by the improving profitability in our property and casualty businesses, supported by strong renewals year to date in improving market conditions,” added Mumenthaler.

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