Swiss Re sees inflation rise on risk list; RU-UA war creates ‘tectonic shifts’ in global macro

Inflation is an ever-bigger bugaboo for an ever-longer horizon across property and casualty lines,  Swiss Re chief executive Christian Mumenthaler (pictured) has warned in a note to shareholders.

"Resurgent" inflation is now on a higher for longer trajectory. Readings should "increase even further and remain very elevated in the US and Europe throughout 2022 and likely stay structurally higher in the longer term versus the last decade," Mumenthaler wrote in his annual letter.

Russia’s invasion of Ukraine will likely be a contributor, having "created tectonic shifts in the entire macro environment believed impossible until very recently."

Economic inflation should be manageable, given the ability to reprice "quickly" in the most affected property and specialty re/insurance lines, he said. The January renewals is the latest example.

Social inflation shows an increasingly troubling impact from the third-party litigation finance industry.

"We are concerned that third-party litigation finance is an expensive and blunt tool to enable legal disputes, with potentially harmful economic and ethical consequences," Mumenthaler wrote.

Comments do nothing to soften Swiss Re's current guidance, the group CEO noted. Mumenthaler remains "confident" on plans for a US GAAP group ROE of 10% in 2022 and 14% in 2024. P&C operations will continue reap benefits of improved earnings quality, he said.

Did you get value from this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.