Swiss Re likes nat cat; eyes double digit premium growth in 2022

Swiss Re is ready to pile into nat cat exposures, with a focus on excess of loss coverage, and can pick up another 10% in premiums in 2022, officials have declared.

“It’s a very attractive segment, one that I will take for its results any day,” Swiss Re’s chief executive officer for reinsurance Moses Ojeisekhoba (pictured) said, citing a 77% combined ratio and $1 billion in pre-tax profits in 2021.

“We expect the market to grow by another 7% [annually] in years to come,” chief underwriting officer Thierry Léger said. “And of course we want to grow in line with that or more if the price levels are good.”

For 2022, Swiss Re believes it can grow its own nat cat premiums by a faster ~10% to $4.2 billion from $3.8 billion in 2021. But the group has also made a stronger increase in its nat cat budget (under GAAP) from $1.5 billion to $1.9 billion.

About half of the ca. 10% increase in premium should come from rate increases designed chiefly to cover inflation issues, Ojeisekhoba said. The group has also been repricing secondary perils as their modelling efforts expand to cover new fields.

Within the natural catastrophe exposures, Swiss Re likes catastrophe XoL on faith that their data and models have the group pole positioned for best pricing and risk management. Aggregate cat XoL continues to look comparatively anathema for being “not so easy to model” and “too close to the money when events happen,” Ojeisekhoba said.

Swiss Re works to get exclusions or limits on natural catastrophe wherever it takes quota share, and goes heavy on retrocession to pick up any spill. Those criteria “make it more difficult for us to grow” in the space, Léger admitted.

ILS and alternative capital will be willingly engaged in retrocession to make sure Swiss Re can handle any size deals on the market and grow without worry for constrictive limits or excessive bending of its own net position, officials said.

“I absolutely see the potential to have investors aligned to that success through ACP and grow,” Léger said.

Increased urbanisation has more property and increasingly valuable property value at risk while economic growth in emerging markets is creating new middle class client swathes now able to identify and protect against risks, officials said of their growth outlook.

Elsewhere in P&C reinsurance, Swiss Re hopes to find sustainable growth in cat and non-cat property, marine & engineering and longevity. The group will seek to drive greater profitability in its motor, health and mortality lines and steer casualty away from US corporate risks to focus on more attractive opportunities elsewhere.

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