The reinsurer has bolstered reserves by $700m over the past year to address the impact of economic inflation
Swiss Re reported a net loss of $285m for the first nine months of 2022, driven by a $442m net loss in the third quarter. P&C Re was impacted by Hurricane Ian and an increase in small- and mid-sized claims in the third quarter, explained the company.
Swiss Re’s group chief executive officer Christian Mumenthaler said: “The first nine months of this year were marked by a confluence of events affecting Swiss Re’s financial performance: from turbulence in the financial markets, to an increase in natural catastrophe claims, surging inflation and the war in Ukraine.
Swiss Re’s group chief financial officer John Dacey said: “We have bolstered reserves by $0.7 billion over the past 12 months to address the impact of economic inflation.
“Rising interest rates are already helping to compensate for this impact, with the recurring contribution from our fixed-income portfolio rising by around $100 million in the third quarter alone.”
P&C Re results reflect headwinds
P&C Re reported a net loss of $283m for the first nine months of 2022, compared with net income of $1.5 billion in the same period in 2021, impacted by natural catastrophes and lower investment results.
Large natural catastrophe claims of $2.5 billion in the period were higher than expected and mainly relate to Hurricane Ian, floods in Australia and South Africa, hailstorms in France as well as a series of other smaller events around the world.
The business also absorbed a negative impact from prior-year events, driven by reserving actions on economic inflation and a large prior-year loss in specialty.
Net premiums earned increased slightly to $16.6 billion, supported by continued price improvements. Calculated at stable foreign exchange rates, the increase of net premiums earned amounts to 4.4%.
Combined ratio of 106%
The combined ratio was 106.1% for the first nine months of 2022 due to significant natural catastrophe losses and economic inflation impact. On a normalised basis, the combined ratio was 96.2%.
Due to an increase in small- and mid-sized claims, driven mostly by economic inflation, the business is unlikely to reach its normalised combined ratio target of less than 94% in 2022.
Mumenthaler added: “While we are disappointed that the Group ROE target is unlikely to be reached this year, we remain confident in our mid-term outlook. In this volatile environment, risk aversion and the need for protection will continue to increase.”
“Our strategy and very strong capitalisation put us in a favourable position for the upcoming renewals amid rising prices and constrained market capacity. We remain committed to drive profitability and create value for our shareholders, clients and employees, as reflected in our 2024 financial targets.”