Swiss Re posts billions in profit and implements price increases
Published: Friday, Feb 16th 2024, 16:00
Updated At: Saturday, Feb 17th 2024, 00:59
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Swiss Re made a profit in the billions last year. The reinsurance group benefited from good investment results and lower catastrophe losses than in 2022. Profits are expected to increase further in the current year.
The bottom line for 2023 was a net profit of 3.2 billion dollars after a plus of 472 million dollars in the previous year, as Swiss Re announced on Friday. The Group thus exceeded its self-imposed target of an annual profit of 3 billion dollars.
The Group's net premiums earned and fee income rose by 4.4% year-on-year to 45.0 billion dollars. The investment result also provided a tailwind, with the insurer achieving a significantly improved return of 3.4 percent (previous year: 2.0 percent)
Turkey earthquake and hurricane
Property and casualty reinsurance (P&C Re) reported a profit of 1.9 billion dollars after just 312 million in the previous year. This was due not least to a "robust underwriting performance and disciplined treaty renewals", it said.
At 1.3 billion dollars, the costs for major losses from natural catastrophes were well below the budget of 1.7 billion dollars. The largest event was the earthquake in Turkey and Syria at the beginning of the year, which cost Swiss Re USD 500 million. Hurricane Otis in Mexico in the fourth quarter had a negative impact of around 150 million dollars.
The reinsurer formed more provisions in liability reinsurance business. This relates to the increasingly expensive compensation and penalty payments for companies in the event of incidents such as environmental pollution. There are also similar developments in the motor vehicle sector: "Payments following traffic accidents, for example, have become increasingly expensive because juries are awarding ever higher sums to victims," said CFO John Dacey in an interview with AWP.
In life reinsurance (L&H Re), Swiss Re exceeded its own targets with a profit of USD 976 million (previous year: USD 416 million). Swiss Re also benefited from a strong investment performance in this business.
Further price increases
The outlook for Swiss Re is good, as the positive price trend of recent years for reinsurers is continuing. In the January round, which is important for treaty renewals, Swiss Re increased the premium volume up for renewal in P&C Re business by 9 percent to 13.1 billion dollars. Overall, price increases of 9 percent were also achieved, it was reported.
The Group also confirmed the financial targets for the new year already announced in December: Swiss Re aims to post a consolidated profit of over 3.6 billion dollars in 2024 in the new IFRS financial statements. The return on equity should be more than 14 percent over the next few years.
Shareholders are to benefit from the increase in profits through a 40 cent higher dividend of 6.80 dollars - whereby the increase for Swiss shareholders will be compensated by the exchange rate development.
Swiss Re's profit figures are roughly in line with expectations. However, some analysts had hoped for an even better result. In a generally friendly stock market, Swiss Re shares were clearly the weakest SMI stock on Friday afternoon, falling by 1.2 percent.
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