First half income of $157m was dented by natural catastrophe losses, COVID-related losses and reserving for the war in Ukraine
Swiss Re returned to profitability in the second quarter of 2022, with a net income of $405m. 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 $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.”
Interest rate rises a ‘positive’ for the sector
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.”
Swiss Re reported a net income of $157m and an ROE of 1.6% for the first half of 2022, compared with a net income of $1 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 $283m for potential impacts from the war in Ukraine in the first quarter, the reinsurer 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%.
P&C reports combined ratio of 98.5%
P&C Re reported a net income of $316m for the first half of 2022, compared with $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 $154 million.
P&C Re absorbed large natural catastrophe claims of $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 $0.27 billion above expectations for large natural catastrophe losses in the first half of the year.
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.
Meanwhile, Corporate Solutions reported a net income of $220m in the first half of 2022, compared with $262m in the prior-year period.
This result was achieved in spite of reserves related to the Ukraine war in the first quarter, less favourable prior-year development compared with the first half of 2021 and lower investment income.
Swiss Re’s group chief executive officer Christian Mumenthaler said: “Thanks to the actions we have taken over the past years, all our businesses are well positioned and focused on achieving their segmental targets for the year. The achievement of the Group targets is highly dependent on the performance of financial markets and large-loss experience in the second half of 2022.
”Our very strong capital position and excellent client franchise enable us to capture further profitable growth opportunities in a supportive pricing environment.”