P&C Re reports strong profit, reflecting improved portfolio quality
In 2021, P&C Re reported a net income of USD 2.1 billion, compared with a net loss of USD 247 million in 2020. The 2021 result reflects the improved quality of the portfolio and rate increases, as well as favorable investment results. P&C Re's net premiums earned grew by 5.3% to USD 21.9 billion, supported by continued price improvements, disciplined underwriting as well as favorable foreign exchange developments.
The business absorbed large natural catastrophe losses of USD 2.1 billion in 2021, mainly relating to Hurricane Ida and the floods in Europe in the third quarter, as well as the US winter storm Uri in the first quarter.
The combined ratio improved markedly to 97.1% for 2021 from 109.0% in 2020. On a normalized basis, P&C Re achieved a combined ratio of 94.7%, in line with its target of less than 95% for the full year.
Successful January P&C Re renewals
P&C Re renewed contracts with USD 8.9 billion in premium volume on 1 January 2022. This represents a 6% volume increase compared with the business that was up for renewal. Strong growth was achieved in property and specialty lines, with natural catastrophe-related premium volume up by 24%. P&C Re achieved a price increase of 4% in this renewal round. This fully offset more conservative loss assumptions, which reflect a prudent view on inflation and other changes in exposure.
L&H Re remains impacted by significant COVID-19 losses, while it continues to improve underlying profitability
L&H Re reported a net loss of USD 523 million for 2021, down from a net income of USD 71 million in 2020, as the business incurred substantially higher COVID-19-related claims of almost USD 2 billion. These losses were primarily driven by the heightened COVID-19-related mortality rates in the US and reflected the spike in infection rates at the beginning of the year as well as during the third and fourth quarters.
Net premiums earned and fee income increased by 7.1% to USD 14.9 billion at improved margins in 2021, primarily driven by large transactions and favorable foreign exchange developments.
Excluding COVID-19 losses, L&H Re improved net income by 26% to USD 1.1 billion in 2021. This reflects the good underwriting performance across all regions, favorable investment results and positive one-off effects from in-force management actions.
Corporate Solutions surpasses 2021 normalized combined ratio target
Corporate Solutions reported a strong net income of USD 578 million in 2021, compared with a net loss of USD 467 million in 2020, as the Business Unit continued to benefit from decisive strategic actions and ongoing price increases. The business successfully absorbed large natural catastrophe losses of USD 345 million, mainly relating to Uri, Hurricane Ida and the tornadoes that affected the central US in early December, as well as large man-made losses of USD 249 million.
Net premiums earned grew by 6.5% to USD 5.3 billion. This was driven by further rate increases in the context of the continued focus on underwriting quality, selective new business growth as well as an improved customer and broker distribution franchise. Favorable foreign exchange developments further helped offset the impact of the previous portfolio pruning actions. Corporate Solutions achieved risk-adjusted price increases of 12%3 for the year.
The Business Unit improved its combined ratio to 90.6% for 2021, compared with 115.5% for 2020. This was the result of disciplined underwriting, strict expense management, continued rate increases and favorable prior-year development. With a normalized combined ratio of 95.0% for the full year, Corporate Solutions surpassed its target of less than 97% in 2021.
iptiQ continues dynamic growth
iptiQ continued to successfully grow its business in 2021, increasing its in-force policies by 144% year on year to more than 1.6 million. Gross premiums written for the core business rose by 95% from the previous year to USD 723 million, with good contributions across all markets and particularly from its property and casualty business in the EMEA region, which was launched in 2020.
For 2022, Swiss Re expects the performance of its property and casualty businesses to continue to improve, reaping the benefits of the Group's sustained focus on portfolio quality in combination with increasing prices. P&C Re targets a normalized combined ratio of less than 94% for 2022, while Corporate Solutions aims for a reported combined ratio of less than 95%.
L&H Re continues to offer attractive business development opportunities, although it is likely to remain impacted by the COVID-19 pandemic in 2022. Taking this into account, L&H Re targets a net income of approximately USD 300 million for the year.