Swiss Re posts Q1’24 net income of $1.1bn and P&C CoR of 84.7%

Reinsurance giant Swiss Re has announced net income of $1.1 billion and a return on equity (ROE) of 21.3% for the first quarter of 2024, as property and casualty reinsurance net income hit $552 million with a combined ratio of 84.7%.

For Q1 2024, Swiss Re is reporting under IFRS for the first time, so this result is not comparable to the Q1 2023 result under US GAAP.

Group-wide, Swiss Re has today reported insurance revenue for the Group of $11.7 billion, with an insurance service result of $1.4 billion, which reflects the profitability of the underwriting activity.

As announced late last year, the reinsurer has started to include a reserving uncertainty allowance on new business written across its P&C businesses, which is estimated to reduce the Group’s post-tax earnings by approximately $500 million in 2024.

Swiss Re achieved an ROI of 4% in Q1 2024, driven by continued increases in recurring income. The recurring income yield for the first three months of 2024 was 3.9%, while the fixed income reinvestment yield stood at 5.0%, continuing to benefit from higher interest rates.

In its P&C reinsurance business, net income reached $552 million in Q1 2024, primarily driven by disciplined underwriting and a low large natural catastrophe experience, supported by a solid investment result. The insurance revenue in Q1 2024 reached $5 billion, and the segment achieved an insurance service result of $704 million and a combined ratio of 84.7% in the quarter.

The reinsurer explains that within P&C reinsurance, it increased reserves for specific large prior-year natural catastrophe and man-made events, and increased reserves on casualty lines. For the full year 2024, Swiss Re is targeting a P&C reinsurance combined ratio of less than 87%.

At the April 1st reinsurance renewals, P&C reinsurance renewed contracts with $2.5 billion in treaty premium volume, which represents a 6% volume increase compared with the business that was up for renewal. P&C achieved a price increase of 12% in this renewal round, and based on a continued prudent view on inflation and updated loss models, loss assumptions increased by 12%.

Within its life and health reinsurance business, net income hit $412 million in Q1 2024, which Swiss Re says reflects US mortality experience in line with expectations and a higher investment result driven by increased yields. The segment generated insurance revenue of $4.8 billion in the first quarter of 2024, with an insurance service result of $434 million.

For 2024, Swiss Re is targeting net income of approximately $1.5 billion for L&H reinsurance.

Turning to Swiss Re Corporate Solutions, and the firm has announced net income of $194 million for the first three months of 2024, confirming its successful trajectory. Large natural catastrophe losses hit $66 million, mainly driven by the Noto earthquake in Japan. Insurance revenue for Q1 2024 was $1.8 billion, benefitting from the good rate environment in most segments and new business growth. The segment achieved an insurance service result of $213 million and a combined ratio of 89.9% for the quarter.

Swiss Re’s Group Chief Executive Officer, Christian Mumenthaler, commented: “Swiss Re had a good start to the year, with all our main businesses posting strong results. This reflects continued underwriting discipline, a strong return on investments and effective management of operating expenses.”

“The transition to IFRS from US GAAP represents an excellent opportunity to demonstrate the economic value of our businesses. The IFRS framework is also more closely aligned with how we steer the company internally and brings to the fore the earnings power of our leading Life & Health Reinsurance franchise,” added Group Chief Financial Officer, John Dacey.

Swiss Re has also announced today that it plans to “withdraw from the iptiQ business and will consider options for the different entities in a manner and timeframe that maximises value for the Group.” This move remains subject to applicable regulatory approvals and notifications, and follows a strategic review of its digital white-label platform.

“The market environment today is vastly different from the one when iptiQ was created. Given these changed conditions and Swiss Re’s strategic priorities, we’ve concluded we are not the best owners of this business going forward,” said Mumenthaler.

“The strong earnings in the first quarter have given Swiss Re a positive start to the year as we continue to focus on our 2024 targets, including a net income of more than USD 3.6 billion. Underwriting discipline, coupled with a favourable market environment, underpin our confidence,” he added.

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