The reinsurer wants to keep pressure on underwriting discipline this year, after a successful 2023, with $3.2bn profit and a 22% RoE.

Swiss Re’s CEO has made a call to maintain underwriting discipline after recent reinsurance pricing gains led the reinsurer to a successful 1/1 renewal and a strong return on equity (RoE) for 2023.

Christian Mumenthaler

 Swiss Re revealed it renewed property and casualty reinsurance business (P&C Re) renewed treaty contracts resulting in $13.1bn in premium volume on 1/1 2024, a 9% volume increase compared with the business that was up for renewal.

 Loss assumptions rose by some 11%, the reinsurer cautioned, based on updated loss models and inflation expectations, but the resulting portfolio quality is seen as “consistent with the group’s 2024 financial targets”.

For 2024, the group targets a net income of more than $3.6bn (under IFRS accounting), and Based on based on its improved profitability, the board of directors will propose an increased dividend of $6.80 per share.

This comes after a 22.3% RoE for 2023 and $3.2bn of annual net income. That compared with just 2.6% RoE and $472m net income in 2022.

The reinsurer said improved underwriting margins supported the result, while higher interest rates also drove an increase in investment income.

Net premiums earned and fee income for the Group rose 4.4% to $45bn in 2023, compared with $43.1bn in the previous year. At constant FX rates, net premiums earned and fee income increased by 4.9%.

“Swiss Re can look back on a successful 2023,” said Swiss Re’s group CEO, Christian Mumenthaler (pictured).

“We achieved all our financial targets in a year that was characterised by geopolitical turbulence and continued economic uncertainty.”

P&C Re’s “solid” 2023

P&C Re premium volume was up by 9% at 1/1 2024 renewals, “and achieved price increases of 9%” on aggregate.

For 2023, P&C Re provided a profitable combined ratio of 94.8%, just on the right side of the target figure of 95%.

P&C Re contributed $1.9bn of net income for last year, dramatically up from just $312bn the year before.

Swiss Re called this a “solid result…primarily driven by a resilient underwriting performance and disciplined renewals”.

Strong margins and positive reserve developments in property and speciality lines helped offset reserve strengthening in the casualty business, the reinsurer added, further supported by another “solid performance” on its investment side.

Swiss Re’s allocated natural catastrophe budget of $1.7bn for 2023 was easily above the claims bill of $1.3bn. The reinsurer listed the earthquake in Turkey and Syria, Hurricane Otis in Mexico, and storms and floods in Europe.

Net premiums earned had risen 4.3% at constant FX rates to reach $22.9bn in 2023.

“Improved price adequacy in our property and casualty businesses following strong renewals and our underwriting discipline helped us to manage elevated industry losses from natural catastrophes, while L&H Re achieved a solid result [$976m net income], benefitting from active in-force portfolio management and a strong investment performance,” Mumenthaler said.

Corporate Solutions resilient

 Swiss Re’s primary insurance arm, Corporate Solutions contributed a combined ratio of 91.7% in 2023, improved slightly from 93.1% the year before.

Corporate Solutions’ net premiums earned remained stable at $5.5bn over the same period.

The segment reported a net income of $678m in 2023, a significant rise from $486m in the previous year.

The increase reflected “a steadily improved portfolio resilience”, according to Swiss Re, “driven by disciplined underwriting and portfolio steering”, with a higher investment result also contributing a hefty chunk of income.

Swiss Re’s group chief financial officer John Dacey, added: “Our businesses are well positioned to benefit from the current market environment, while the higher interest rate environment supports recurring investment income.”

Outlook statement

Swiss Re confirmed the financial targets from its investors’ day in December last year. For 2024, the group targets a net income of more than $3.6bn under IFRS.

Within that overall goal, P&C Re targets a combined ratio of less than 87% for 2024, the reinsurer said, with Corporate Solutions aiming for below 93% combined ratio.

“In 2024, we continue to put emphasis on underwriting discipline as evidenced in the successful January renewals,” Mumenthaler said.

“Our focus on costs and strengthening proximity to our clients also remains paramount. Finally, the accounting transition from US GAAP to IFRS will be beneficial to our earnings and reported balance sheet strength.”