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Swiss Re sees cause for optimism as rates continue to firm

Swiss Re Group says the hardening rate environment will provide it with a cushion for the fallout from COVID-19.

The reinsurer expects its Property and Casualty Reinsurance arm to achieve an improved normalised combined ratio of 96% or lower next year, supported by positive rate momentum.

“We are optimistic on the outlook for all of our businesses as we see positive momentum in the underlying earnings power of the group,” Group CEO Christian Mumenthaler said. “Our confidence is underpinned by Swiss Re’s capital strength and the proactive approach we have taken to the group’s COVID-19 reserves.

“We expect that COVID-19 will remain an earnings and not a capital event for the group, with declining exposures going forward.”

In its most recent earnings report, the Property and Casualty Reinsurance unit made a $US201 million ($275 million) loss in the nine months to September, as the pandemic and other disasters including the Beirut port blast hammered revenues.

COVID-19 claims and reserves cost the unit $US1.6 billion ($2.2 billion) in the nine-month period while the combined ratio worsened to 110.3% from 101.4% a year earlier.