Swiss Re bounces back to profit on tighter underwriting discipline; CEO paints bullish outlook

Swiss Re, the world's second-largest reinsurer, is reaping the benefits of “strategic underwriting actions” that helped the business swing back to profit with strong performance in its property/casualty reinsurance division, turning around from a loss in the nine-month period a year ago.

The Zurich-based global reinsurer claimed to have absorbed large natural catastrophe losses, but still managed to generate a solid net profit of $1.3 billion in the first nine months of 2021, supported by “dramatically lower” COVID-19-related impacts as well as strong investment results.

Its property & casualty reinsurance (P&C Re) business reported a net profit of 1.5 billion in 9M of 2021, up from $1.2 billion in the same period of 2020. Large nat cat losses for the first nine months of the year amounted to $1.7 billion, which Swiss Re said was higher than expected, but still below the premiums earned for this class of business.

P&C Re’s net premiums earned grew by 6 percent to $16.4 billion, and the combined ratio significantly improved to 97.5 percent in 9M 2021, from 110.3 percent in the same period last year.

The Corporate Solutions reported a net profit of $425 million, compared with a net loss of $357 million in the first nine months of last year. The business unit absorbed $212 million losses mainly related to Uri and Hurricane Ida, and large man-made losses. Its net premiums earned rose 6.2 percent to $3.9 billion, and combined ratio came in at 91.1 percent, a vast improvement from 116 percent reported in the prior-year period.

Swiss Re's Life and Health (L&H Re) segment, however, swung to a net loss of $62 million in the nine-month period due to lingering Covid-19-related losses in its life business. This compares with a net profit of $72 million in the prior-year period, as well as positive net profit for the second and third quarters of this year. L&H Re's net premiums earned increased by 10.2 percent to $11.1 billion, buttressed by large transactions and favourable foreign exchange developments.

Overall, the company's chief executive officer Christian Mumenthaler (pictured) credited “sustained focus on portfolio quality and disciplined underwriting” for driving its financial turnaround, while expressing a bullish market outlook for the remainder of the year and 2022.

“We continue to reap the benefits of our strategic underwriting actions and see opportunities across all businesses to deploy capital at attractive returns,” he said. “This gives us confidence for the remainder of the year and into 2022, with all our businesses well positioned to continue their strong performance.”

Swiss Re’s group chief financial officer John Dacey noted that “P&C Re and Corporate Solutions are delivering on their ambitious targets for this year, with a combined net income of just below USD 2 billion in the first nine months.

“We are also pleased with the underlying performance of L&H Re, which offset the impact from the pandemic, resulting in a reported profit for the second consecutive quarter.”

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