Global:Swiss Re dragged into red ink by COVID-19-related claims and reserves

Swiss Re has reported a Group net loss of $878m for 2020. Excluding $3.9bn of COVID-19-related claims and reserves (pre-tax) for the year, Swiss Re's net income was $2.2bn, a material increase from $727m in 2019, the global reinsurance giant says in a statement.

Swiss Re’s Group CEO Christian Mumenthaler said: “The COVID-19 pandemic continues to affect communities and businesses across the globe. The start of vaccination efforts brings hope that the situation will improve soon. Our Group has gone through this crisis with confidence and strength, and in our role as a shock absorber we are doing our part to help mitigate the challenges of the pandemic and improve resilience to future systemic risks.

“From the start of the pandemic, we took a disciplined and prudent approach to building reserves as actual claims have been slow to come in. While some further COVID-19 losses are expected in 2021, we have dramatically reduced relevant exposures in P&C lines.”

He said that there has been broad-based improvements in portfolio quality and underwriting margins in P&C Re and Corporate Solutions, including in the January renewals.

Successful Jan P&C Re renewals

P&C Re renewed contracts with $7.8bn in premium volume on 1 January 2021. This represents an 11% volume decrease compared with the business that was up for renewal, reflecting the focus on underwriting quality and improved terms and conditions. P&C Re achieved a nominal price increase of 6.5% in this renewal round, more than offsetting lower interest rates and higher loss assumptions.

The successful renewals allow for an improved normalised combined ratio estimate of less than 95% for P&C Re for 2021, compared with the estimate provided in November 2020 of less than or equal to 96%.

Outlook

Mr Mumenthaler said: “We are confident in the outlook for 2021 with COVID-19 losses mostly behind us. We look forward to improving profitability in the P&C Re business as a result of our focus on portfolio quality and the favourable market environment. Our L&H Re client franchise is very strong, positioning us to grow, especially through tailored transactions. On Corporate Solutions, we are well ahead of the turnaround we set for 2021. iptiQ is delivering impressive growth, creating new partnerships and underlining our position as a technology-driven risk knowledge company.“

Total COVID-19 claims and reserves in 2020 (Figures are in $m):

Source: Swiss Re