Swiss Re slips to loss due to COVID-19, Mumenthaler says crisis 'far from over'

Swiss Re, the world's second-largest reinsurer, swung to a loss in the first quarter of 2020 due to the impact of COVID-19, despite taking "timely and substantial measures" to protect its balance sheet and mitigate the negative impacts of market turbulence on its portfolio.

Chief executive Christian Mumenthaler insisted that “Swiss Re’s business remains resilient despite the financial impact of the crisis", highlighting its capital strength and strong investment portfolio.

Mumenthaler, however, warned that the crisis is "far from over and its broader economic and social consequences will be far-reaching".

The Zurich-based global reinsurer reported a net loss of $225 million, compared with a net profit of $429 million a year earlier.

The loss reflected the impact of COVID-19 on the underwriting ($476 million) and investment (net $300 million) results.

The first quarter was also adversely impacted by a mark-to-market charge of $251 million pre-tax on the sale of ReAssure due to the decline in Phoenix Group Holdings plc’s share price. Swiss Re said the agreed sale of ReAssure is on track and is expected to close mid-2020.

The company's corporate solutions arm also posted a net loss of $167 million, impacted by losses related to COVID-19.

Swiss Re's property and casualty business was impacted by expected claims for cancelled or postponed events, while the life and health segment saw no material impact (either mortality or critical illness) from the pandemic.

Chief financial officer John Dacey said: “We took timely and substantial measures to protect our balance sheet and hedge investment positions in the first quarter, ahead of one of the sharpest sell-offs in recent history. This allowed us to largely mitigate the negative impacts of market turbulence, and the low impairments in our portfolio underscore its quality. As markets remain volatile, we continue to be vigilant to the challenges the current conditions present."

Mumenthaler said: “Swiss Re’s business remains resilient despite the financial impact of the crisis on our results. And our industry-leading capital position means we will weather this situation as a strong partner for our clients.

“The COVID-19 pandemic is far from over and its broader economic and social consequences will be far-reaching. Our industry plays an important part by absorbing some of the pain caused by this crisis. At Swiss Re, we continue to be here for our clients, run our business without interruptions, and use the flexibility allotted by our capital strength. We are confident that we will make a positive contribution."

He added: "In the longer term, we will need to draw lessons from the current situation and look at public-private partnership solutions to ensure society can better deal with such large-scale disruptive events in the future."