Swiss Re 2019 results show increase in net income despite challenges

Swiss Re Group’s 2019 results showed a rise in net income but were affected by “heavy natural catastrophe losses”, the decision to reposition Corporate Solutions and “increased claims in US casualty”, according to chief executive officer Christian Mumenthaler.

The full year results showed the reinsurer achieved a 73 percent increase in group net income rising to $727 million in 2019 from $421 million in 2018.

Group gross written premiums (GWP) rose 16 percent to $42.2 billion in 2019 from £36.4 billion in 2018.

However, the group’s property and casualty businesses were impacted by $2.7 billion losses from natural catastrophes and man-made events, as well as by increased claims in US casualty.

GWP for P&C rose 30 percent to $21.5 billion in 2019 from $16.5 billion the year before.
P&C Re reported a net income for the full year of $396 million, up from $370 million in 2018. The result reflected large natural catastrophe and man-made losses of $2.3 billion as well as proactive measures to address ongoing trends in US casualty.

The large natural catastrophe losses in 2019 were driven mainly by typhoons Hagibis and Faxai in Japan, Hurricane Dorian in the Atlantic and wildfires, floods and hail storms in Australia. The result was further impacted by late claims development from Typhoon Jebi. In addition, man-made losses included the Ethiopian Airlines crash and the subsequent grounding of the Boeing 737 MAX fleet. The P&C Re combined ratio had worsened to 107.8 percent in 2019, compared with 104 percent for 2018.

Life and health businesses continued to perform strongly,reporting a net income for 2019 of $899 million, up from $761 million in 2018, as well as a return on equity above its target range. GWP for this division dropped slightly by one percent to $14.4 billion in 2019 from $14.5 billion a year earlier.

Corporate Solutions reported a net loss of $647 million and a combined ratio of 127.9 percent in 2019, up from 117.5 percent the year before. GWP rose 6 percent to $4.9 billion in 2019 from $4.6 billion in 2018.

Performance in this area was affected by the management actions announced on July 31 2019 to reposition the business and strengthen reserves. The result was also affected by large and medium-sized claims, mainly from prior accident years related to the recent deterioration in the US casualty business.

Life Capital reported a net loss of $177 million for 2019, reflecting a $200 million charge related to the agreement to sell ReAssure. Excluding this one-time accounting impact, net income rose to $53 million from $23 million in 2018. GWP of the open books increased by 22 percent in 2019, when measured at constant foreign exchange rates.

Mumenthaler said: “Our 2019 results were impacted by heavy natural catastrophe losses, our decisive management actions to reposition Corporate Solutions and increased claims in US casualty. We are taking proactive measures to put us at the forefront of adverse trends. On the other hand, we delivered an excellent investment result and strong performance in L&H Re, demonstrating the power of our diversified business model. We achieved a key strategic milestone with the agreement to sell ReAssure. And we are starting 2020 with an improved quality of our portfolio, underpinned by strong January renewals and pricing momentum.

“We remain firmly committed to building resilience for our clients, communities and governments as they face significant and wide-ranging challenges. We will focus on completing the sale of ReAssure and improving the performance of Corporate Solutions through active portfolio pruning and rate increases. We remain confident in our ability to proactively address new industry developments and capture business opportunities while maintaining attractive shareholder returns.”