Swiss Re are back in the black, more here;
Swiss Re returned to profitability in the second quarter of 2022, with a net income of USD 405 million. After the first quarter was marked by negative impacts from the financial market downturn, the COVID-19 pandemic and reserving for the war in Ukraine, this resulted in a net income of USD 157 million for the first half of 2022.
Swiss Re’s Group Chief Executive Officer Christian Mumenthaler said: “After a challenging start to the year, Swiss Re returned to profitability in the second quarter. This was supported by strong results in Life & Health Reinsurance and Corporate Solutions, as well as robust underwriting performance in Property & Casualty Reinsurance.”
Swiss Re’s Group Chief Financial Officer John Dacey said: “Rising interest rates are clearly positive for the re/insurance sector, and we are starting to see the benefits come through in our recurring income yield. With respect to inflationary trends, we remain vigilant and are taking appropriate actions, including increasing the pricing of new business and the related initial loss expectations.”
Group results significantly improve in the second quarter, despite ongoing challenges in financial markets
Swiss Re reported a net income of USD 157 million and an ROE of 1.6% for the first half of 2022, compared with a net income of USD 1.0 billion and an ROE of 8.2% for the same period in 2021. The decline was driven mainly by significantly lower investment results as well as first-quarter reserves for the Ukraine war.
After establishing reserves of USD 283 million for potential impacts from the war in Ukraine in the first quarter, Swiss Re did not increase them in the second quarter.
Net premiums earned and fee income for the Group increased 1.9% to USD 21.2 billion in the first six months of 2022 from USD 20.8 billion in the first half of 2021. Growth was negatively affected by adverse foreign exchange developments, while at stable foreign exchange rates, net premiums earned would have increased by 5.1%.
Swiss Re’s recurring income yield increased to 2.3% in the first half of 2022 from 2.2% for the full year 2021, benefiting from targeted reinvestments in the rising interest rate environment. The fixed income reinvestment yield increased markedly to 3.1% in the second quarter of 2022 from 0.9% for the full year 2021. The return on investments of 1.2% in the first half of 2022 was impacted by listed equity mark-to-market losses (net of hedges) of approximately USD 0.4 billion as well as modest impairments of USD 50 million including Russia-related exposures.
Swiss Re’s capital position remained very strong, with the Group Swiss Solvency Test (SST) ratio above the 200–250% target range.
P&C Re’s technical underwriting performance remains robust
P&C Re reported a net income of USD 316 million for the first half of 2022, compared with USD 1.3 billion in the same period in 2021. The result reflects the robust technical underwriting performance of the business, offset by materially lower investment results and first-quarter reserves in relation to the Ukraine war of USD 154 million.
P&C Re absorbed large natural catastrophe claims of USD 938 million in the period, mainly relating to flooding in Australia and South Africa, February storms in Europe, and a series of hailstorms in France in June. Total claims came in USD 0.27 billion above expectations for large natural catastrophe losses in the first half of the year. Importantly, P&C Re has USD 1.2 billion of the USD 1.9 billion full-year natural catastrophe budget allocated for the remainder of 2022.
Net premiums earned increased slightly to USD 10.6 billion. The increase was largely due to higher volumes and price increases, offset by adverse foreign exchange developments. At stable foreign exchange rates, net premiums earned would have increased by 3.6%.
The combined ratio was 98.5% for the first half of 2022. On a normalised basis, the combined ratio was 95.8%, which includes 1.5 percentage points for the reserves relating to the war in Ukraine. For the second half of the year, the normalised combined ratio is expected to be lower, as the Group earns the majority of its natural catastrophe premiums in the third and fourth quarters. P&C Re remains focused on achieving the normalised combined ratio target of less than 94% for the full year.