Swiss Re knocked from 2022 targets on $1.3bn Hurricane Ian hit

Global reinsurer  Swiss Re will likely take $1.3 billion in claims from Hurricane Ian, enough to deliver a half billion dollars in third quarter net losses and knock the group off of its 2022 target for a 10% return on equity, management admitted in a preliminary loss estimate.

The estimate, net of retrocession and before tax, remains “subject to uncertainty” and may yet be “subsequently adjusted as the claims notification and assessment process continues.”

Losses will hit a P&C Re combined ratio that had already been off-track, management noted. P&C Re was already suffering “an increase in small- to mid-sized claims, partly driven by economic inflation,” sufficient to put the division behind plan for a normalised combined ratio of less than 94%, management noted.

Expect a P&C Re combined ratio well in technical loss territory. Analysts at Deutsche Bank had already pencilled in a $1.25 billion hit, leading them to assume a Q3 2022 combined ratio at 109.9%, below what they cited as a market consensus of 111.9%.

Swiss Re built its earnings estimate on preliminary estimates of total insured market losses from Hurricane Ian at $50–65 billion, including sums allocatable to the National Flood Insurance Program (NFIP).

Officials at the Swiss reinsurer moved to comfort investors with word that both the Life & Health as well as the Corporate Solutions division are “on track” to achieve their 2022 targets of approximately $300 million net profit and a reported combined ratio of less than 95%.

And the solvency position remains strong, officials added, citing the group solvency ratio of 274% on the Swiss Solvency Test scale at the outset of the third quarter. “This allows Swiss Re to pursue profitable opportunities in a hardening reinsurance market, while remaining committed to its capital management priorities,” the company said.

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