Swiss Re spies prospects in Asia as it shuns unprofitable business

Swiss Re offered some interesting insights into its future strategic priorities in its  results covering the first quarter of 2017 as it emphasised initiatives to close so-called protection gaps in society and opportunities in Asia.

The reinsurer’s profits were hit by catastrophe claims, mainly in Australia, and its gross written premiums shrank by 10.5 percent in the quarter. GWP in its P&C reinsurance unit alone shrank by some 17.6 percent.

The company highlighted that this was due to an active reduction in capacity, in particular in EMEA and Chinese quota share business, partly because prices did not meet profitability expectations and stressed it will maintain this approach.

“In the April treaty renewals Swiss Re maintained its underwriting discipline and reduced capacity in business which did not meet its profit expectations. Premium volume decreased by 2 percent,” it said.

“The year-to-date risk-adjusted price quality remains at 101 percent, the same as during the January renewals, exceeding the hurdle rate to achieve Swiss Re's targeted Group ROE over the cycle. Swiss Re maintained an attractive portfolio, supported by large and tailored transactions.”

Against this backdrop of competitive pricing, it stressed its interest in certain Asian markets. It noted that a significant milestone in the first quarter was the opening of its new India branch in Mumbai in February 2017. The company was among the first five foreign reinsurance companies to obtain a license to sell reinsurance in India.

“The Indian insurance sector is expected to grow at an average annual growth rate of 8 percent from 2017 to 2025. Swiss Re will therefore be able to offer both non-life and life and health reinsurance solutions directly to clients and brokers in the country,” it said.

It also noted the establishment of a dedicated regional legal entity in Singapore, for its Reinsurance Business Unit, which was announced in April, which it said demonstrates the company's ongoing commitment to Asia.

It also noted that it continues to invest in its research and development activities, further strengthening its position as a risk knowledge company, noting that the launch of the Swiss Re Institute in March 2017 is a good example of this.

“This focus on providing research on pressing industry topics, ranging from cyber risks to food security, will help Swiss Re to support society in closing global protection gaps,” it said.

“These efforts, together with the successful application of Swiss Re's existing strategic framework, position the Group well to meet market challenges and take advantage of the opportunities that emerge as protection needs develop.”

Christian Mumenthaler, Swiss Re’s Group CEO, said: “We see that risk pools continue to expand, even though we expect the overall environment to keep us on our toes. We will remain selective about the risks we accept. Our unique client relationships, strong capital base and deep risk knowledge enable us to deploy our strengths to help our clients and society at large."

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