Reinsurance News

Swiss Re’s Q1 net income halved as Cyclone Debbie losses hit

4th May 2017 - Author: Staff Writer

Swiss Re’s first quarter results show it’s been a tough start to the year with net income halved from last year’s Q1 $1.2 billion to just $656 million, these stark losses come after Cyclone Debbie cost the reinsurer $350 million in expected insurance claims.

The annualised Group return on equity (ROE) is at 7.5%, nearly half of 2016’s 14.6%, gross written premium results, however, remained relatively stable shifting just slightly down from $11.4 billion to $10.1 billion this year.

The firm’s P&C Re net profit fell to $321 million in the quarter, as the segment took the majority of the Cyclone Debbie impact, of $320 million.

Swiss Re’s Group Chief Executive Officer (CEO), Christian Mumenthaler, commented that the firm’s top line shows its maintained discipline despite pricing pressure across the industry by “not accepting unprofitable business.”

“Our high-quality investment portfolio continues to make a significant contribution to the overall result. Events like Cyclone Debbie do take a toll on our short-term performance, but more than anything, they take a toll on people’s lives, destroy infrastructure and weaken economies.

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“At the same time, natural catastrophes like this one underscore the purpose of the insurance industry overall. It is during such times that we can deliver our core services and demonstrate the value we provide to our clients and to society,” he added.

Swiss Re was hit with a lion’s share of $350 million Cyclone Debbie losses in Q1, after the firm expanded its Australian market share to nearly double its 2011 size, Deutsche Bank analysts revealed in their Q1 European reinsurance market report.

The $350 million Cyclone Debbie blow reveals a Swiss Re market loss share of 27% up from 2011 Cyclone Yasi losses of $145 million, or 14.5% of Yasi market shares.

Swiss Re’s Q1 annualised return on investments (ROI) was at 3.4% with fixed income running yield at 2.9% for; gross premiums written for 2017 first quarter fell by 10.5% to $10.2 billion.

Looking forward, the reinsurer has affirmed its commitment to a stronger Asia regional identity – in April Swiss Re announced the establishment of a Singapore legal entity for its Reinsurance operations.

Other Q1 highlights include the launch of the Swiss Re Institute in March, which aims to provide cutting-edge research on the most relevant re/insurance topics and issues.

Mumenthaler added; “We see that risk pools continue to expand, even though we expect the overall environment to keep us on our toes.

“We will remain selective about the risks we accept. Our unique client relationships, strong capital base and deep risk knowledge enable us to deploy our strengths to help our clients and society at large.”

The first-quarter results show above average natural catastrophe losses from Cyclone Debbie have dealt the reinsurer a heavy blow, but as one of the world’s largest reinsurer’s Swiss Re has maintained a stable growth strategy with a disciplined underwriting approach, and positive results despite a quarter of high losses, rate pressures, and low-interest rates.

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