Swiss Re Corporate Solutions adds margin H1, with key exception

Swiss Re’s primary commercial insurance division Corporate Solutions took stronger rate and evaded large losses to pad its margins in property and specialty lines in H1, masking a technical loss in casualty lines where professional liability has suffered and merited a retreat.

Corporate Solutions cut 1.8 points from its combined ratio to 91% “despite some market headwind,” with management calling out reduced large losses and continued, albeit slowed, gains in insurance rates.

“Corporate Solutions is well on track to reach its full-year combined ratio target of less than 94%,” management said.

Rates in the segment will be under continued upward pressure from prior loss, inflation and the increased cost of capital, but growth can't return to levels from 2020 and 2021 from which the slowdown continues, management warned. Macro pressures and the rise in deductibles from strapped insureds “run the risk of reducing real premium growth.”

Nat cat losses of $20 million in corporate solutions were down from the prior year on “overall low participation” in major events.

Man-made large loss of $113 million was called elevated, but still down on the prior year period which had been hit by the opening salvos of the Russian invasion of Ukraine.

In property lines, mark the combined ratio down 1.8 points to 65.2% on reduced claims and strong new business, and down 8.1 points in specialty where the Ukraine war had decimated the prior period.

But corporate casualty suffered, with the combined ratio for the lines up 7.3 points to a technical loss-making 110.6% on deterioration of prior period professional liability contracts and new reserves against inflation in the line.

Net earned premiums in the corporate solutions segment are down a notable 11% to $2.57 billion following a deconsolidation.

Adjusted for that unit disposal and for the change in FX rates, net earned premium growth would have hit 3.9% “driven by new business growth in selected focus portfolios, partially offset by conscious reductions in professional liability lines.”

Combined with the investment income allocated to the segment, profits in the commercial primary division increased by nearly half.

Add on top of that a tripling of segment profit in P&C Re and a major rebound in Life & Health Re and the Swiss Group delivered a group net profit of $1.45 billion, a full nine times the depressed prior year period.

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