Swiss Re posts billion-dollar profit after nine months
Published: Friday, Nov 3rd 2023, 12:00
Updated At: Saturday, Nov 4th 2023, 00:54
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In the first nine months of the year, Swiss Re benefited from a strong investment result and lower catastrophe losses than in the previous year, posting a profit in the billions. In the same period last year, the reinsurer was still in the red due to high major losses from natural catastrophes.
Group profit in the months from January to September amounted to 2.47 billion US dollars compared to a loss of 285 million in the previous year, as Swiss Re announced on Friday. The reinsurer made a profit of around one billion in the third quarter alone. All business segments contributed to the good result.
High investment return
The Group's net earned premiums and fee income rose by 4.2% to 33.7 billion dollars from January to September 2023. At constant exchange rates, the increase would have amounted to 5.3 percent.
Swiss Re also made money with its investments, where the insurer benefited from the rise in interest rates: In the first nine months of 2023, it achieved a return of 3.5%. This is more than twice as much as in 2022 (1.6%).
Thick capital cushion
The reinsurer is now sitting on a thick capital cushion: the Group's SST ratio was 314% as at July 1, 2023. According to the Swiss Solvency Test (SST), the ratio is therefore well above the target range of 200% to 250%.
The good capitalization gives the company the opportunity to grow its business further in the future, said CFO John Dacey on a conference call. "We also plan to do this if we can achieve reasonable prices in the renewal season starting in January."
Storms, forest fires, earthquakes
Property and Casualty Reinsurance (P&C Re) posted a profit of 1.5 billion dollars in the first nine months after a loss of 283 million a year ago. Major losses due to natural catastrophes were not even half as high as in the previous year: in the first nine months, Swiss Re still had to shoulder 1.1 billion dollars after paying 2.5 billion dollars in natural catastrophe losses in the same period last year.
In the third quarter, the result was impacted above all by severe storms in Europe and the devastating forest fires in Hawaii, as well as the earthquake in Morocco. However, the reinsurer also significantly increased its reserves in the US liability business.
In life reinsurance, Swiss Re almost tripled its profit to USD 634 million (previous year: USD 221 million). Compared to the previous year, the division benefited not least from the decline in death benefits due to coronavirus. The corporate insurance segment Corporate Solutions also developed positively, contributing USD 492 million (previous year: USD 356 million) to the Group result.
Share price falls
Unsurprisingly, Swiss Re also confirmed its profit target of "more than 3 billion dollars" for the year as a whole. However, raising the target, which had already come very close with the nine-month result, was apparently not an issue: CFO Dacey referred to the remaining two months of the year in front of the media: there are currently numerous geopolitical tensions, and earthquakes are "not seasonal".
Although the quarterly profit clearly exceeded analysts' expectations, Swiss Re shares fell on Friday. In the late morning, the shares were down 0.8 percent at 99.56 francs. However, observers attributed this to profit-taking after the shares had reached a new high for the year the previous day.
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