Major ‘turning point’ for Swiss Re as profits rebound to $1.4bn after big drop due to pandemic
Global reinsurance giant Swiss Re’s “sharpened group strategy” and disciplined underwriting helped the business swing back to profit, turning around from the massive loss of last year, with strong performance in its property/casualty reinsurance business comfortably outweighing the loss in life & health segment. Its chief executive described 2021 as an “important turning point” for Swiss Re.
The Zurich-based reinsurer, one of the largest in the world, claimed to have absorbed large natural catastrophe losses, but still managed to generate a solid net profit of $1.4 billion in full-year 2021, "considerably rebounding" from a net loss of $878 million a year ago.
Large nat cat losses during the year amounted to $2.4 billion, while total COVID-19-related claims reached $2 billion. The vast majority of these COVID-19 losses originated in the L&H Re business, while impacts on the property and casualty businesses were minimal. Swiss Re noted that excluding the impacts of COVID-19, its net profit would have been $3 billion.
Swiss Re's gross premiums written rose 9% to $47 billion, compared with $43 billion in 2020.
Its property & casualty reinsurance (P&C Re) business reported a net profit of $2.1 billion, and the combined ratio improved markedly to 97.1% in 2021, compared with a net loss of $247 million and 109.0% CR in 2020.
P&C Re’s net premiums earned grew by 5.3% to USD 21.9 billion, supported by continued price improvements, disciplined underwriting as well as favourable foreign exchange developments.
The Corporate Solutions benefited from "decisive strategic actions" and ongoing price increases and reported a net profit of $578 million in 2021, compared with a net loss of $467 million a year ago. The business unit absorbed large natural catastrophe losses of $345 million, mainly relating to Uri, Hurricane Ida and the tornadoes that affected the central US in early December, as well as large man-made losses of $249 million. Its net premiums earned grew by 6.5% to $5.3 billion, and combined ratio improved to 90.6% for 2021, compared with 115.5% for 2020.
Swiss Re's life and health (L&H Re) segment, however, swung to a net loss of $523 million for 2021, down from a net income of $71 million in 2020, as the business incurred substantially higher COVID-19-related claims of almost $2 billion. These losses were primarily driven by the heightened COVID-19-related mortality rates in the US and reflected the spike in infection rates at the beginning of the year as well as during the third and fourth quarters.
Overall, the company's chief executive officer Christian Mumenthaler (pictured) credited “rigorous focus on portfolio quality and underwriting excellence” for driving its financial turnaround, while expressing a bullish market outlook for 2022.
“With our sharpened Group strategy and clear business development priorities, we will continue the strong trajectory displayed in these full-year results,” he said.
“The new financial targets for the Group and individual businesses reflect the ambition to drive profitability and create value for our shareholders, clients and employees. While we remain in an uncertain environment with regards to the pandemic, we are confident in the Group’s ability to deliver against these targets, underpinned by our very strong capital position.”
Commenting on the results, Moody’s analyst Dominic Simpson, said: “Swiss Re has returned to profit in 2021 but net income was again significantly hit by COVID-related claims of $2 billion coming almost entirely from the Group’s Life & Health business which will be further impacted by COVID in the early part of 2022.
“More positively, strong results in the P&C Reinsurance and Corporate Solutions business, despite significant nat cat activity, comfortably outweighed the Life & Health loss.”
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