Swiss Re profits surge 577% with P&C gains; eyes bolder 2024

Swiss Re capitalised on an “attractive market”, leveraging improved price adequacy and robust underwriting to secure major gains in property and casualty reinsurance while meeting all its financial targets in a year its CEO hailed as “a successful 2023”. Large natural catastrophe claims remained below budget, while profits surged by 577% as it recovered from the challenges of the previous year.

The global reinsurance giant's net profit soared to $3.2 billion and a return on equity (ROE) of 22.3% in full-year 2023, a significant leap from the previous year's $472 million net profit and 2.6% ROE. Swiss Re attributed the results to improved underwriting margins and higher investment income, driven by rising interest rates.

The fourth quarter alone saw a net profit of $748 million.

Net profit in property and casualty Reinsurance (P&C Re) surged to $1.9 billion, up from $312 million the previous year, fuelled by disciplined underwriting and January 2024 renewals. The renewals boosted premium volume by 9%, with price increases of 9%. P&C Re renewed treaty contracts resulting in $13.1 billion in premium volume at 1.1 2024. 

Management highlighted “strong margins and positive reserve developments in property and speciality lines helped offset reserve strengthening in the casualty business,” supported by solid investment performance.

The P&C Re’s combined ratio improved significantly to 94.8%, achieving the sub-95% target and improving from the previous year’s 102.4%. Net premiums earned increased by 3.9% to $22.9 billion.

Large natural catastrophe claims remained under the $1.7 billion budget at $1.3 billion. These included significant events like the Turkey and Syria earthquake, Hurricane Otis in Mexico, and various storms and floods across Europe. 

The Life and Health (L&H Re) segment doubled its net profit to $976 million from $416 million, supported by strong in-force portfolio management and investment outcomes, despite higher mortality claims in the US.

L&H Re’s net premiums earned and fee income rose 4.4% to $15.6 billion, fuelled by large transactions across regions.

Swiss Re Corporate Solutions improved its net profit to $678 million from $486 million. The division also reported a combined ratio of 91.7%.

Net premiums earned in 2023 remained steady at $5.5 billion. Adjusting for constant exchange rates and excluding the sold elipsLife business, there was a 7.3% increase, driven by new business in property, credit & surety, and accident & health, partially offset by “conscious reductions” in professional liability lines.

iptiQ, Swiss Re's division, increased its gross premiums by 29.3% to $1.1 billion, narrowing its pre-tax loss to $247 million from $362 million in 2022.

Looking ahead to 2024, Swiss Re aims for a net profit of over $3.6 billion under IFRS, with L&H Re targeting a net profit of $1.5 billion. P&C Re aims for a combined ratio under 87%, and Corporate Solutions under 93%. Swiss Re is also aiming for a multi-year IFRS ROE of over 14%.

Commenting on the results, Swiss Re group chief executive officer Christian Mumenthaler (pictured left), said: “Swiss Re can look back on a successful 2023. We achieved all our financial targets in a year that was characterised by geopolitical turbulence and continued economic uncertainty. Improved price adequacy in our property and casualty businesses following strong renewals and our underwriting discipline helped us to manage elevated industry losses from natural catastrophes, while L&H Re achieved a solid result, benefitting from active in-force portfolio management and a strong investment performance.”

Group chief financial officer John Dacey (pictured right) added: “Our businesses are well positioned to benefit from the current market environment, while the higher interest rate environment supports recurring investment income. This positive earnings momentum gives us confidence to increase the pay-out to investors by proposing a 6% higher ordinary dividend of USD 6.80 per share for 2023.”

On financial targets and outlook, Mumenthaler said: “In 2024, we continue to put emphasis on underwriting discipline as evidenced in the successful January renewals. Our focus on costs and strengthening proximity to our clients also remains paramount. Finally, the accounting transition from US GAAP to IFRS will be beneficial to our earnings and reported balance sheet strength.”

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