Swiss Re will incur a net loss of $399 mn for the Q3 2022 due to the impact of Hurricane Ian

JP Morgan have forecast that Swiss Re will incur a net loss of $399 million for the third quarter of 2022, largely due to the impact of Hurricane Ian, as well as loss creep on other catastrophe events and investment market volatility.

Based on a market-wide loss forecast of around $50 billion from Ian, JP Morgan believes that Swiss Re will take a $1.5 billion hit from this event in its P&C Re segment.

On top of this, loss creep from French hail, Australian floods and other events during the quarter such as Hurricane Fiona and Typhoon Nanmadol altogether amount to an assumed $1.9 billion of natural catastrophe losses.

At this level, losses are nearly three times higher than Swiss Re’s nat cat budget of $650 million for the Q3 period.

If losses do materialise to this extent, JP Morgan estimates that Swiss Re’s Q3 combined ratio will be around 114.0%, bringing its figure for the first nine months of the year to 104.2%.

Given remaining uncertainty, JP Morgan has also taken out its previous assumption for further reserves related to Russia/Ukraine that it had previously assumed in Q4.

Looking at Swiss Re’s L&H Re segment, analysts noted that COVID-related deaths have receded but some additional mortality impact is still expected, with JP Morgan pegging this figure at around $40 million.

But the Swiss Re Corporate Solutions unit should perform well despite elevated nat cat losses of potentially $200 million, with JP Morgan forecasting a combined ratio of 100.5% for Q3.

The firm also forecasts an H1 SST ratio 255%, with a flat dividend expected for the year and no share buyback anticipated.

by Yana Keller