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Swiss Re headquarters in Zurich
21 February 2019Insurance

Swiss Re posts solid 2018 results despite cats; Mumenthaler anticipates rate hikes

Some $3 billion of large claims from natural catastrophes and man-made losses battered Swiss Re’s 2018 results but the reinsurer still posted a decent profit and increased its gross written premiums by some 5 percent.

On the back of the result, its CEO struck a tone of optimism saying the company is growing yet keeping its cost base flat and he anticipates rates will now harden after two years of severe claims.

The company made a net profit of $421 million in 2018, which was actually an improvement on 2017 when it made a $331 million profit in a year also hammered by large catastrophe losses. Its property/casualty unit’s combined ratio was 104 percent, an improvement on the 111.5 percent it posted a year earlier.

It stressed that 2018 was the fourth-costliest year for the insurance industry according to the Swiss Re Institute. It also noted that excluding the impact of the US GAAP accounting change on recognition of equity investments, group net income would have been $894 million.

Within its net profit, its property/casualty unit posted a net income of $370 million after absorbing some $2.3 billion of claims; its life & health unit made $761 million; and its corporate solutions unit made a loss of $405 million after absorbing claims of $700 million.

The company achieved strong growth last year. Its gross premiums written increased by 4.7 percent to reach $36.4 billion, primarily driven by premium growth across the group’s life and health businesses.

The company also revealed that in the January renewals it renewed $10.0 billion of business, an increase of 19 percent as it benefited from large transactions and growth in the core business. It also said that rates increased by 1 percent overall with improvements most pronounced in the loss-affected property and casualty lines. It stressed that it also Swiss Re expects further price improvements in the forthcoming renewals later this year.

Christian Mumenthaler, the company’s CEO, said: “There was no respite from large nat cat events and man-made disasters in 2018. Our financial strength enabled us to support our clients in these tough times. It was the second challenging year in a row for the industry and us. Our P&C businesses were heavily impacted by the events. Corporate Solutions’ results were disappointing.

“But even in challenging conditions, I am optimistic about Swiss Re’s future. In the January renewals of our P&C Re business, we were able to grow while keeping our running costs flat. We expect further price improvements in the renewals later this year, especially in the loss-affected markets.”

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