Home / International / Swiss Re says 'worst is over’
22 February 2021
Swiss Re says the worst of the coronavirus’ impact on its earnings is over after pandemic-related claims blew out to $US3.9 billion ($4.94 billion) on business interruption, cancelled events and higher mortality last year.
The pandemic wiped around three billion US dollars from Swiss Re’s net profit for 2020, leading to a net loss of $US878 million ($1.11 billion). Excluding the unprecedented COVID impacts, Swiss Re achieved a net profit of $US2.2 billion ($2.78 billion).
The reinsurer expects COVID-19-related claims and reserves in its property and casualty businesses of less than half a billion US dollars in 2021, compared with $US1.9 billion ($2.41 billion) last year.
Nominal price increases of 6.5% were achieved in January at Property and Casualty Reinsurance (P&C Re) renewals, Swiss Re revealed, and along with a focus on portfolio quality, that would allow an improved normalised combined ratio this year, which it estimated to be less than 95%, versus 99.8% in 2020 excluding COVID-19 losses and 109% with the losses reflected.
“We are confident in the outlook for 2021 with COVID-19 losses mostly behind us,” Swiss Re’s Group CEO Christian Mumenthaler said.
“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.”
P&C Re posted a net loss of $US247 million ($312.87 million) yet the underlying performance was strong, with net income reaching $US1.3 billion ($1.65 billion) excluding the COVID-19 impact, almost three times 2019 net income.
Mr Mumenthaler said the start of COVID vaccination efforts brought "hope that the situation will improve soon”.
“While some further COVID-19 losses are expected in 2021, we have dramatically reduced relevant exposures in P&C lines. I am very encouraged by broad-based improvements in portfolio quality and underwriting margins in P&C Re and Corporate Solutions, including in the January renewals.”
Natural catastrophe losses amounted to $US1.7 billion ($2.15 billion) in 2020, largely driven by the Atlantic hurricane season, which included a record 30 named storms. The Beirut port explosion in the third quarter helped push all catastrophe losses up to $US3.1 billion ($3.93 billion).
Mr Mumenthaler says Swiss Re’s L&H Re client franchise is very strong and positioned to grow, Corporate Solutions was well ahead of a turnaround set for this year and iptiQ is delivering impressive growth.