Swiss Re has reported a net loss of $285 million for the first nine months of 2022, driven by a loss in the third-quarter of $442 million on the back of lower investment results and large natural catastrophe claims.
The net loss of $285 million and a return on equity (ROE) of -2.1% for 9M 2022 compares with net in come of $1.3 billion and an ROE of 6.6% for 9M 2021.
Swiss Re attributes the dramatic shift to lower investment results, large nat cat claims of $2.7 billion, and first-quarter reserves of $283 million related to Russia’s ongoing invasion of Ukraine.
Additionally, Group Chief Financial Officer (CFO), John Dacey, explained that Swiss Re has bolstered reserves by $700 million over the past year to address the impact of economic inflation, which suggests other players will likely need to take similar actions.
Rising interest rates are already helping to compensate for this impact, with the recurring contribution from our fixed-income portfolio rising by around USD 100 million in the third quarter alone. Most importantly, despite the challenges this year, we have maintained our very strong capital position and remain committed to our capital management priorities
John Dacey, Group Chief Financial Officer (CFO)
Starting with the firm’s property and casualty (P&C) reinsurance division, this part of the business fell to a net loss of $283 million for 9M 2022, down from the $1.5 billion profit for the same period last year.
Swiss Re says that at $2.5 billion, large natural catastrophe claims were higher than expected for the period and mainly relate to Hurricane Ian, floods in Australia and South Africa, hailstorms in France, alongside a series of other smaller events around the world.
Prior-year events also had a negative impact on the P&C reinsurance result, driven by reserving actions on economic inflation, and a large prior-year loss in specialty. Moderate strengthening in the liability segment was in line with the previous year and mostly offset by redundancies in other areas, explains Swiss Re.
Within P&C reinsurance, net premiums earned increased to $16.6 billion from $16.4 billion, supported by continued price improvements.
However, the P&C reinsurance combined ratio deteriorated from 97.5% in 9M 2021 to 106.1% in 9M 2022 on the back of the elevated nat cat experience and the impact of economic inflation.
Swiss Re warns that as a result of the increase in small and mid-sized claims, mostly as a result of economic inflation, P&C reinsurance is unlikely to reach its normalised combined ratio target of less than 94% in 2022. For 9M 2022, the normalised combined ratio was 96.2%.
In contrast, Swiss Re’s Life and Health (L&H) reinsurance business has seen a return to profitability in 2022, recording 9M 2022 net income of $221 million, compared with a loss of $32 million a year earlier, as claims related to COVID-19 fell from $1.2 billion to $608 million.
Within L&H reinsurance, net premiums earned and fee income was largely unchanged at $11.2 billion for 9M 2022, with the division on track to reach its net income target of roughly $300 million for the full-year.
In Corporate Solutions, Swiss Re has reported 9M 2022 net income of $356 million, down from $425 million in the prior year period. The segment’s result remained resilient despite reserves related to the war in Ukraine and large nat cat losses of $187 million, mainly related to Ian and the flooding in Australia.
Year-on-year, Corporate Solutions benefited significantly less from favourable prior year reserve development and also absorbed less investment income when compared with the previous year.
Still, net premiums earned increased by more than 4% to $4.1 billion for 9M 2022, driven by new business growth in selected focus portfolios along with continuous earn-through of previously realised rate increase.
Corporate Solutions has recorded a combined ratio of 93.1% for 9M 2022, with the business unit on track to meet its full-year target of less than 95%.
Lastly, Swiss Re’s iptiQ entity continued to grow in 9M 2022, with gross written premiums increasing by 25% to $650 million.
On the asset side of the balance sheet, Swiss Re has revealed that its return on investment in 9M 2022 of 1.6% was hit by negative mark to market impacts on listed equity investments.