Swiss Re posts 9M $468m net loss after nat cat events

Swiss Re reported a net loss of $468 million for the first nine months of 2017 after a net income of $3.0 billion in the same period of 2016, reflecting the $3.6 billion expected insurance claims from hurricanes Harvey, Irma, Maria, and the Mexico earthquakes.

The performance of property/casualty (P&C) Re's and Corporate Solutions' units were both affected by the events.

P&C Re reported a net loss of $652 million after a net income of $1.55 billion in the same period a year ago. The combined ratio of the unit deteriorated to 114.1 percent after 93.9 percent in the 9 months of 2016, after the impact of large natural catastrophe losses was “well above” expected levels. P&C Re continued to experience positive prior-year development during the first nine months of 2017, according to the Nov. 2 statement.

Gross premiums written at P&C Re declined 12.6 percent year on year to $13.4 billion in the first nine months as Swiss Re maintained a strict disciplined underwriting approach, ensuring it receives an adequate price for the protection it provides, according to the statement.

Corporate Solutions reported a net loss of $762 million for the first nine months of 2017 after a net income of $150 million in the same period a year ago. The result was impacted by the recent nat cat events in the US, which is Corporate Solutions' largest market, the Caribbean and Mexico. The combined ratio for the first nine months of 2017 was 142.6 percent compared to 99.3 percent in 2016. Gross premiums written of the unit increased by 1.9 percent year on year to $2.9 billion in the first nine months.

The business unit expects to incur claims of approximately $975 million for these events. As an excess layers and a net capacity provider, Corporate Solutions' results are subject to higher volatility, but large losses can be absorbed by the Swiss Re’s balance sheet, the company said.

As a result of the large natural catastrophe losses, the group has strengthened Corporate Solutions' capital position with a $1.0 billion capital injection. This underlines Swiss Re's commitment to this business, given the attractiveness of the commercial insurance market and the confidence in the business unit's long-term strategy, according to the statement.

"The severe natural catastrophes we have experienced so far this year have clearly impacted our results,” said Swiss Re's CEO Christian Mumenthaler. “At the same time, we are able to absorb these losses and join forces with our clients to help affected people and businesses in getting back on their feet. This shows that our strategy to ensure superior capitalisation at all times is paying off. We believe we have the financial strength to respond to potential market developments and we continue to stay committed to creating long-term shareholder value.”

Overall, gross premiums written of the group in the first nine months declined 5.1 percent year on year to $26.7 billion, as Swiss Re applied a disciplined underwriting approach in challenging market conditions, the company said.

Life & health (L&H) Re delivered net income of $741million in the first nine months, driven by a “good underwriting result and good investment performance”. Return on equity (ROE) on an annualised basis was 14.3 percent. Gross premiums written at L&H Re in the first nine months increased 1.4 percent year on year to $9.68 billion compared to the first nine months of last year, mainly due to new wins and business growth in the US and Asia.

“We are strongly positioned to work with our partners to capture market opportunities when they arise – as they often do after such events – and continue to tackle protection gaps around the world,” Mumenthaler commented.

Swiss Re said that the company maintains a “very strong capital position and high financial flexibility”. As a result, Swiss Re launched its public share buy-back programme of up to CHF 1.0 billion on Nov. 3, 2017.

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