Swiss Re reports a net loss of USD 285 million for first nine months of 2022

Ad hoc announcement pursuant to Article 53 LR

  • Property & Casualty Reinsurance (P&C Re) net loss of USD 283 million; combined ratio of 106.1% and normalised1 combined ratio of 96.2%
  • Life & Health Reinsurance (L&H Re) net income of USD 221 million
  • Corporate Solutions net income of USD 356 million; combined ratio of 93.1%
  • Return on investments (ROI) of 1.6%, reflecting negative mark-to-market impacts on listed equity investments; Q3 recurring income yield increased to 2.8%
  • Very strong capital position with a Group Swiss Solvency Test (SST) ratio of 274% as of 1 July 2022

Swiss Re reported a net loss of USD 285 million for the first nine months of 2022, driven by a USD 442 million net loss in the third quarter. While P&C Re was impacted by Hurricane Ian and an increase in small- and mid-sized claims in the third quarter, L&H Re and Corporate Solutions continued to deliver strong results and remain on track to meet their full-year targets.

Swiss Re's Group Chief Executive Officer Christian Mumenthaler said: "The first nine months of this year were marked by a confluence of events affecting Swiss Re's financial performance: from turbulence in the financial markets, to an increase in natural catastrophe claims, surging inflation and the war in Ukraine. While P&C Re has been significantly affected by these headwinds, all other businesses are performing well and are on track to reach their 2022 financial targets."

Swiss Re's Group Chief Financial Officer John Dacey said: "We have bolstered reserves by USD 0.7 billion over the past 12 months to address the impact of economic inflation. Rising interest rates are already helping to compensate for this impact, with the recurring contribution from our fixed-income portfolio rising by around USD 100 million in the third quarter alone. Most importantly, despite the challenges this year, we have maintained our very strong capital position and remain committed to our capital management priorities."

Group results reflect headwinds

Swiss Re reported a net loss of USD 285 million and a return on equity ROE of –2.1% for the first nine months of 2022, compared with a net income of USD 1.3 billion and an ROE of 6.6% for the same period last year. The decline was mainly driven by significantly lower investment results, large natural catastrophe claims of USD 2.7 billion as well as first-quarter reserves of USD 283 million related to the war in Ukraine.

Net premiums earned and fee income for the Group rose 1.3% to USD 32.4 billion in the first nine months of 2022 compared with the same period last year. Growth was negatively affected by adverse foreign exchange developments, while at stable foreign exchange rates, the increase amounts to 5.2%.

Very strong capital position and rising recurring investment income

Swiss Re's ROI of 1.6% was affected by negative mark-to-market impacts on listed equity investments. Credit impairments remained low. The recurring income yield increased to 2.4% for the first nine months of 2022 from 2.2% for the same period last year, benefiting from targeted reinvestments in the rising interest rate environment. In the third quarter, the recurring income yield rose to 2.8%, while the fixed income reinvestment yield reached 4.1%.

Swiss Re's capital position remained very strong, with a Group Swiss Solvency Test (SST) ratio of 274% as of 1 July 2022.

P&C Re results impacted by natural catastrophe claims in Q3

P&C Re reported a net loss of USD 283 million for the first nine months of 2022, compared with net income of USD 1.5 billion in the same period in 2021, impacted by natural catastrophes and lower investment results. Large natural catastrophe claims of USD 2.5 billion in the period were higher than expected and mainly relate to Hurricane Ian, floods in Australia and South Africa, hailstorms in France as well as a series of other smaller events around the world.

The business also absorbed a negative impact from prior-year events, driven by reserving actions on economic inflation and a large prior-year loss in specialty. Moderate strengthening in the liability segment was in line with the previous year and mostly offset by redundancies in other areas.

Net premiums earned increased slightly to USD 16.6 billion, supported by continued price improvements. Calculated at stable foreign exchange rates, the increase of net premiums earned amounts to 4.4%.

The combined ratio was 106.1% for the first nine months of 2022 due to significant natural catastrophe losses and economic inflation impact. On a normalised basis, the combined ratio was 96.2%. Due to an increase in small- and mid-sized claims, driven mostly by economic inflation, the business is unlikely to reach its normalised combined ratio target of less than 94% in 2022.

L&H Re profitability rebounds

L&H Re reported a net income of USD 221 million for the first nine months of 2022, compared with a net loss of USD 32 million for the first nine months of 2021, as COVID-19-related claims decreased from USD 1.2 billion to USD 608 million. While the first quarter of 2022 was still strongly impacted by COVID-19-related claims, the business returned to profitability in the second and third quarters, supported by a large transaction and despite significantly lower investment results this year.

Net premiums earned and fee income remained largely unchanged at USD 11.2 billion for the first nine months of 2022 compared with the prior-year period. Calculated at stable foreign exchange rates, the increase of net premiums earned amounts to 4.0%.

L&H Re is on track to reach its net income target of approximately USD 300 million for 2022.

Corporate Solutions continues strong performance

Corporate Solutions reported a net income of USD 356 million in the first nine months of the year, compared with USD 425 million in the prior-year period. The continued solid result confirms improved resilience of the underlying business and was achieved despite reserves related to the Ukraine war and large natural catastrophe losses of USD 187 million, mainly relating to Hurricane Ian and flooding in Australia. In addition, the Business Unit benefitted significantly less from favourable prior-year development and absorbed lower investment income compared with the first nine months of the prior-year period.

Net premiums earned increased by 4.6% to USD 4.1 billion for the first nine months of 2022, driven by new business growth in selected focus portfolios along with continuous earn-through of previously realised rate increases, partly offset by the reduction in premiums as of the third quarter, following the sale of the ElipsLife business. Calculated at stable foreign exchange rates, the increase of net premiums earned amounts to 9.2%.

Corporate Solutions' combined ratio of 93.1% for the first nine months of 2022 is well on track to reach the full-year target of less than 95%.

iptiQ continues to grow its business

iptiQ's gross premiums written increased 25% to USD 650 million in the first nine months of 2022, with growth being achieved across all regions.

Outlook

As disclosed on 18 October 2022, Swiss Re is unlikely to reach its Group ROE target of 10% in 2022. Nevertheless, Swiss Re remains confident in the mid-term outlook and committed to its goal of boosting US GAAP Group ROE to 14%2 in 2024.

Swiss Re's Group Chief Executive Officer Christian Mumenthaler said: "While we are disappointed that the Group ROE target is unlikely to be reached this year, we remain confident in our mid-term outlook. In this volatile environment, risk aversion and the need for protection will continue to increase. Our strategy and very strong capitalisation put us in a favourable position for the upcoming renewals amid rising prices and constrained market capacity. We remain committed to drive profitability and create value for our shareholders, clients and employees, as reflected in our 2024 financial targets."

   

9M 20213

9M 2022

USD millions, unless otherwise stated

Consolidated Group (total)

Net premiums earned and fee income

31 960

32 366

 

Net income/loss

1 258

–285

 

Return on equity
(%, annualised)

6.6

–2.1

 

Return on investments
(%, annualised)

3.0

1.6

 

Recurring income yield
(%, annualised)

2.2

2.4

   

31.12.21

30.09.22

 

Shareholders’ equity

23 568

11 910

 

Book value per share (USD)

81.56

41.21

   

9M 2021

9M 2022

P&C Reinsurance

Net premiums earned

16 443

16 606

 

Net income/loss

1 500

–283

 

Combined ratio (%)

97.5

106.1

L&H Reinsurance

Net premiums earned and fee income

11 226

11 202

 

Net income/loss

–32

221

 

Recurring income yield
(%, annualised)

2.9

3.1

Corporate Solutions

Net premiums earned

3 944

4 125

 

Net income/loss

425

356

 

Combined ratio (%)

91.1

93.1

1 Normalised combined ratio assumes average large natural catastrophe loss burden and excludes prior-year reserve development.

2 As of 2024, Swiss Re Group will report under IFRS. Current modelling indicates that the equivalent IFRS target will be higher than 14%.

3 Comparative information for 2021 has been revised to reflect the reallocation of part of Principal Investments, Admin Re US as well as certain cross-segmental loans from Group items to Reinsurance.

Financial calendar

17 February 2023

Full-year 2022 results*

16 March 2023

Publication of Annual Report 2022

12 April 2023

159th Annual General Meeting

4 May 2023

First-quarter 2023 results

*Full-year 2022 press release and analyst presentation. The Financial Review publication will no longer be produced.

Media conference call

Swiss Re will hold a virtual media conference this morning at 08:30 CEST. In order to participate, please dial in 10 minutes prior to the start using the following numbers:

Switzerland:

+41 (0) 58 310 5000

United Kingdom:

+44 (0) 207 107 0613

United States:

+1 (1) 631 570 5613

Germany:

+49 (0) 69 5050 0082

France:

+33 (0) 1 7091 8706

Hong Kong:

+852 5808 1769

Investor and analyst call

Swiss Re will hold an investors' and analysts' call at 14:00 CEST, which will focus exclusively on Q&A. Investor and analyst presentation can be accessed here. You are kindly requested to dial into the conference call 10–15 minutes prior to the start using the following numbers:

Switzerland:

+41 (0) 58 310 5000

United Kingdom:

+44 (0) 207 107 0613

United States:

+1 (1) 631 570 5613

Germany:

+49 (0) 69 5050 0082

France:

+33 (0) 1 7091 8706

About Swiss Re

The Swiss Re Group is one of the world's leading providers of reinsurance, insurance and other forms of insurance-based risk transfer, working to make the world more resilient. It anticipates and manages risk – from natural catastrophes to climate change, from ageing populations to cyber crime. The aim of the Swiss Re Group is to enable society to thrive and progress, creating new opportunities and solutions for its clients. Headquartered in Zurich, Switzerland, where it was founded in 1863, the Swiss Re Group operates through a network of around 80 offices globally.

Cautionary note on forward-looking statements

Certain statements and illustrations contained herein are forward-looking. These statements (including as to plans, objectives, targets, and trends) and illustrations provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to a historical fact or current fact. Further information on forward looking statements can be found in the Legal Notice section.

Further Information

components.peopleArea.title.vh