COVID-19 dents Swiss Re H1 results; CEO Mumenthaler bullish on 2020 outlook

Zurich-based global reinsurer  Swiss Re suffered a significant impact on its earnings in the first-half of 2020 due to the extraordinary crisis caused by COVID-19 but expects the future impact to be "manageable". Chief executive Christian Mumenthaler highlights "strong capital position" and improving pricing conditions as cause for optimism for the remainder of 2020 and beyond.

The reinsurer reported a net loss of $1.1 billion for the first half of 2020 after booking claims and reserves related to COVID-19 of $2.5 billion, compared with a net profit of $953 million in H1 2019. Excluding the impact of COVID-19 losses, net income amounted to $865 million for the period.

Swiss Re also reported a loss in its commercial insurance arm and property & casualty reinsurance segment due to claims and reserves related to COVID-19. Corporate Solutions reported a net loss of $301 million, while property & casualty segment generated a net loss of $519 million. Net profit in the life & health reinsurance plummeted to $74 million, compared with $459 million in the same period a year ago.

P&C combined ratio deteriorated to 115.8 percent from 100.5 percent in H1 2019, while Corporate Solutions combined ratio stood at 122.6 percent from 132.8 percent a year ago.

Gross premiums written increased by 3 percent to $12.8 billion in the P&C segment, 5.8 percent to 7.4 billion in the L&H segment, and 1.7 percent to $2.2 billion in the Corporate Solutions business.

Swiss Re’s group CEO Mumenthaler said: “As the extraordinary crisis caused by COVID-19 unfolds across the globe, we share our sympathies with those who have suffered personal loss and financial uncertainty. Swiss Re is doing its part to facilitate recovery from this crisis, and we are working with many stakeholders around the world on improving resilience to future large systemic risks.

“Based on current information and a prudent analysis of our businesses, and recognising the inherent uncertainty of the ongoing pandemic, we expect the claims and reserves we have booked in the first half of 2020 to cover the majority of our ultimate COVID-19 losses. While the impact on our earnings is significant, it remains manageable as our operations continue uninterrupted, all our businesses are performing well and our capital position allows us to take advantage of attractive opportunities in an improving market."

John Dacey, Swiss Re’s group chief financial officer, added: “Although the COVID-19 crisis is still evolving, we took a prudent approach to build substantial reserves for the Group’s exposures already in the first half of this year. This gives us more certainty in the outlook for the remainder of 2020 and beyond. Thanks to our disciplined long-term approach to capital management and the decisive actions taken early in the crisis to protect our balance sheet, our capital position remains very strong."

Commenting on the outlook, Mumenthaler said: “We are encouraged by the good progress we see in all of Swiss Re’s businesses so far this year. While some degree of uncertainty remains with regards to future COVID-19 losses, we are confident in the outlook for our Group. Thanks to our disciplined capital management, we are in a strong position to continue to support our clients and deploy capital for business growth in improving pricing conditions."