Swiss Re P&C net income falls 75% y/y in H1 2022

Swiss Re P&C net income was down substantially for the first half of 2022 as it was hit with large natural catastrophe claims and the effects of the war in Ukraine.

P&C results showed net income of US$316 million for H1 2022, down from $US1.3 billion in H1 in 2021, a reduction of 75.7%.

However,  Swiss Re suggested this result could have been worse if it were not for its “robust technical underwriting performance”, which was undermined by materially lower investment results and first-quarter reserves in relation to the Ukraine war of US$154 million.

In H1 2022, P&C Re absorbed natural catastrophe claims of US$938 million. This mainly related to flooding in Australia and South Africa, February storms in Europe, and a series of hailstorms in France in June.

Swiss Re said that total P&C claims came in US$0.27 billion above expectations for large natural catastrophe losses in H1 this year. But it emphasised that its P&C division still has US$1.2 billion of its US$1.9 billion full-year natural catastrophe budget for the rest of 2022.

Net premiums earned for P&C increased slightly to US$10.6 billion in H1 2022, up from UD$10.5 billion for the same period the year before. The P&C combined ratio deteriorated to 98.5% for H1 2022, up from 94.4% in H1 2021. Swiss Re said: “On a normalised basis, the combined ratio was 95.8%, which includes 1.5 percentage points for the reserves relating to the war in Ukraine. For the second half of the year, the normalised combined ratio is expected to be lower, as the group earns the majority of its natural catastrophe premiums in the third and fourth quarters. P&C Re remains focused on achieving the normalised combined ratio target of less than 94% for the full year.”

The reinsurer said its July P&C Re renewals had been successful as it renewed contracts with US$4.8 billion in treaty premium volume on 1 July 2022. The business achieved a price increase of 12% in this renewal round.

Half year group results

Swiss Re said the overall group had returned to profitability in the second quarter of 2022, with a net income of US$405 million up from a net loss of US$248 million in the first quarter of 2022, as previously reported.

The reinsurer said the first quarter of the year was marked by negative impacts from the financial market downturn, the COVID-19 pandemic and reserving for the war in Ukraine. These factors led to a group net income of US$157 million for the first half of 2022.

Christian Mumenthaler (pictured), the company’s group CEO, said: "After a challenging start to the year,  Swiss Re returned to profitability in the second quarter. This was supported by strong results in Life & Health Reinsurance and Corporate Solutions, as well as robust underwriting performance in Property & Casualty Reinsurance."

Group chief financial officer John Dacey said: "Rising interest rates are clearly positive for the re/insurance sector, and we are starting to see the benefits come through in our recurring income yield. With respect to inflationary trends, we remain vigilant and are taking appropriate actions, including increasing the pricing of new business and the related initial loss expectations."

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