Swiss Re suffers outsized claims exposure in 2019

Although 2019 is expected to prove to have been an average catastrophe loss year for most reinsurers, Swiss Re has outsized exposure to those regions where claims were highest, according to an equity research report from independent securities and investment banking firm Jefferies.

It states that there is nevertheless a positive element to Swiss Re’s situation: “Although a third year in a row of high catastrophe claims is disappointing, we expect that Swiss Re will probably benefit from the largest exposure to rising prices,” it says.

The report says that Japan was already a source of high claims for Swiss Re in 2018 with Typhoons Trami and Jebi, and in 2019, the situation did not noticeably improve, with the group losing $460 million to Typhoon Faxai in Q3 2019 and potentially another $720m million (Jefferies estimate) to Typhoon Hagibis in Q4 2019 (being a 9 percent share of $8bn industry losses).

“In man-made claims, we expect Swiss Re to record losses from the property damage and business interruption caused by riots in Chile,” states the report. Jefferies estimates that for the third year in a row, Swiss Re will exceed its large loss budgets.

“Though outsized losses relative to peers are disappointing, the group will similarly benefit from outsized price rises,” the report concludes.