Swiss Re shelves share buybacks after catastrophe losses

Swiss Re, the world’s biggest reinsurer, has reported a 23 percent rise in net income for the first nine month of the year, boosted by its investment division.

However, the company said it had cancelled the second part of a share buyback programme, mostly due to catastrophe losses. Swiss Re shares fell slightly, down 1.2 percent, in early trading on Thursday.

Group net income rose to $1.3 billion, up from $1.1 billion. Property & Casualty Reinsurance (P&C Re) net income rose 39 percent to $880 million, with a combined ratio of 101.4 percent, up from 99.5 percent. The Group’s P&C businesses were impacted by $ 1.7 billion in large claims from natural catastrophes and manmade events.

Company-wide, the underwriting performance was impacted by $1.1 billion of large claims from natural catastrophes in the current year, including approximately U$460 million from Typhoon Faxai in Japan and approximately $300 million from Hurricane Dorian in the Atlantic. Swiss Re estimates total insured market losses at approximately $7 billion for Typhoon Faxai and approximately $4.5 billion for Hurricane Dorian. Estimated claims from large man-made events amounted to approximately $310 million and included losses stemming from the Ethiopian Airlines crash and the subsequent grounding of the Boeing 737 MAX fleet and the compulsory liquidation of Thomas Cook. The underwriting performance was also impacted by late claims development from Typhoon Jebi in the first quarter, in line with a material increase in the total market loss.

Net premiums earned and fee income rose to $28.4 billion, from $25.8 billion.

Swiss Re’s chief executive Christian Mumenthaler said: “The strength of our business with its global reach, diversification and very strong capitalisation enabled us to react fast and support our clients and their customers affected by the large natural catastrophes and man-made events in the first nine months. Our Reinsurance Business Unit achieved profitable growth in a challenging market environment. The transformation of Corporate Solutions is underway, and we continue to benefit from robust gross cash generation in Life Capital. Our leading market position and positive rate dynamics year to date give us confidence for the upcoming renewal season.“

Swiss Re said that in light of the capital deployment, significant natural catastrophe losses in 2019, and the decision to suspend the initial public offering of ReAssure, it has decided not to launch the second tranche of its the public share buy-back programme. The first tranche of the public share buy-back programme of up to CHF 1 billion purchase value, which started on 6 May 2019, is well on track, with more than 60 percent already completed as of 30 September 2019.

Swiss Re’s Group Chief Financial Officer John Dacey said: “The Group’s results in the first nine months underline the strength of our franchise. Despite multiple large natural catastrophe and man-made claims affecting the business, our capital position remains very strong, allowing us to take advantage of growth opportunities in an improving pricing environment.“

Corporate Solutions reported a net loss of $441 million and a combined ratio of 127 percent. The result was impacted by the decisive management actions to reposition the business as announced on 31 July 2019 as well as medium-sized and large claims. Large man-made and natural catastrophe losses of approximately $290 million for the nine-month period include significant claims from Hurricane Dorian and the compulsory liquidation of Thomas Cook in the third quarter.

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