- Net premiums earned and fee income: USD 38,594 million (+12%)
- Net income: USD 727 million (+73%)
- Return on equity: 2.5% (+1.1 pp.)
- Return on investments: 4.7% (+0.9 pp.)
- Running yield: 2.8% (-0.1 pp.)
Group net premiums earned and fee income rose 12% to USD 38.6 billion, primarily driven by premium growth in P&C Re.
The Group's ROE improved to 2.5% from 1.4%. Based on the Group's very strong capital position and supported by confidence in Swiss Re's long-term capital generation, the Board of Directors will propose to the Annual General Meeting (AGM) an increased dividend of CHF 5.90 per share and authorisation for a public share buyback of up to CHF 1 billion.
Christian Mumenthaler, Swiss Re Group Chief Executive Officer, said:
"Our 2019 results were impacted by heavy natural catastrophe losses, our decisive management actions to reposition Corporate Solutions and increased claims in US casualty. We are taking proactive measures to put us at the forefront of adverse trends. On the other hand, we delivered an excellent investment result and strong performance in L&H Re, demonstrating the power of our diversified business model. We achieved a key strategic milestone with the agreement to sell ReAssure. And we are starting 2020 with an improved quality of our portfolio, underpinned by strong January renewals and pricing momentum."
Swiss Re continued its strong investment result track record, reporting an ROI of 4.7% for 2019, up from 2.8% in 2018. The improvement was driven by a strong equity market performance, including a significant contribution from the sale of the Group's investment in the Brazilian insurance group SulAmerica S.A., as well as gains within the fixed income portfolio. The Group's running yield was largely unchanged at 2.8% compared with 2.9% in the declining global yield environment.
The Group's capital position remains very strong with a Group Swiss Solvency Test (SST) ratio above the 220% target level. Taking into account the Group's sustained capital generation, Swiss Re's Board of Directors will propose a dividend of CHF 5.90 per share for 2019, representing a 5% increase. The dividend will be paid after shareholder approval at the AGM on 17 April 2020. The Board of Directors will also request authorisation from shareholders at the AGM for a public share buyback programme of up to CHF 1 billion purchase value, to be executed at the discretion of the Board and subject to the necessary regulatory approvals.
John Dacey, Swiss Re Group Chief Financial Officer, said:
"Despite significant loss events in 2019, Swiss Re maintains its very strong capital position and continued reserve adequacy. P&C Re matched strong growth with rigorous expense discipline, Corporate Solutions also improved its expense ratio, and L&H Re continues to deliver robust performance. The strength of our business model allows us to continue to offer an attractive dividend bolstered by a public share buyback programme."
- Net premiums earned: USD 19,275 million (+20%)
- Net income: USD 396 million (+7%)
- Combined ratio: 107.8% (+3.8 pp.)
- Return on equity: 4.4% (+0.7 pp.)
P&C Re reported a net income for the full year of USD 396 million, up from USD 370 million in 2018. The result reflected large natural catastrophe and man-made losses of USD 2.3 billion as well as proactive measures to address ongoing trends in US casualty. This was balanced by profitable business growth, driven by large transactions and expansion in natural catastrophe business, as well as by a very strong investment result. Net premiums earned increased 20% to USD 19.3 billion. The ROE was 4.4% compared with 3.7% in 2018.
The large natural catastrophe losses in 2019 were driven mainly by typhoons Hagibis and Faxai in Japan, Hurricane Dorian in the Atlantic and wildfires, floods and hailstorms in Australia. The result was further impacted by late claims development from Typhoon Jebi. In addition, man-made losses included the Ethiopian Airlines crash and the subsequent grounding of the Boeing 737 MAX fleet.
The P&C Re combined ratio was 107.8% in 2019, compared with 104.0% reported for 2018. The normalised combined ratio was in line with previous estimates and is expected to improve to 97% for 2020.
Swiss Re renewed contracts with USD 10 billion in premium volume on 1 January 2020. This represents a 2% volume increase compared with 2019 as increases in property business, particularly in the natural catastrophe book, were partly offset by a reduction in casualty lines.
P&C Re achieved a nominal price increase of 5% in this renewal round. Risk-adjusted price quality was unchanged, reflecting lower interest rates and more conservative loss assumptions. Business in many loss-affected regions, such as Japan and Australia, is due to renew later in the year.
L&H Reinsurance FY2019 figures
- Net premiums earned and fee income: USD 13,004 million (+1%)
- Net income: USD 899 million (+18%)
- Running yield: 3.3% (-0.1 pp.)
- Return on equity: 12.4% (+1.3 pp.)
L&H Re reported a strong net income for 2019 of USD 899 million, compared with USD 761 million in 2018. Net premiums earned and fee income increased to USD 13.0 billion from USD 12.8 billion in 2018. Adjusted for unfavourable foreign exchange movements and the termination of an intragroup retrocession agreement with Life Capital, net premiums earned and fee income rose 6.9%.
Return on equity for L&H Re improved to 12.4% from 11.1% in 2018 and was above the business segment's target range of 10-12%.
The underwriting result included a negative adjustment to the carrying value of an existing treaty, which had to be fair valued following the acquisition of Old Mutual Wealth Life Assurance Limited by ReAssure from Quilter plc, reflecting the decrease in interest rates since treaty inception. As a result, L&H Re rebalanced its asset portfolio, realising gains of a similar magnitude. Excluding this adjustment, the underwriting result was higher than in 2018, driven by active portfolio management and improved mortality developments in the Americas.
- Net premiums earned: USD 4,166 million (+6.1%)
- Net income: USD (647) million (FY2018: USD (405) million)
- Combined ratio: 127.9% (+10.4 pp.)
- Return on equity: -34.1% (FY2018: -19.4%)
Corporate Solutions reported a net loss of USD 647 million and a combined ratio of 127.9% in 2019, impacted by the decisive management actions announced on 31 July 2019 to reposition the business and strengthen reserves. The result was also affected by large and medium-sized claims, mainly from prior accident years related to the recent deterioration in the US casualty business.
Net premiums earned rose 6.1% to USD 4.2 billion, as double-digit rate increases and growth in targeted lines of business more than offset the impact from active pruning of selected underwriting portfolios.
The Business Unit is making progress in actively managing risk exposure to ensure a more focused and profitable portfolio going forward. The strong pricing momentum experienced in 2019 has continued into early 2020, with Corporate Solutions achieving price increases of 14% in January 2020. The normalised combined ratio for Corporate Solutions is estimated to improve to 105% in 2020, supported by the accelerating momentum in insurance rates and progress in repositioning portfolios. The target normalised combined ratio for 2021 remains at 98%.
Life Capital FY2019 figures
- Net premiums earned and fee income: USD 2,149 million (+34%)
- Net income: USD (177) million (FY2018: USD 23 million)
- Gross cash generation: USD 1,138 million (+39%)
- Return on equity: -3.4% (FY2018: 0.4%)
Life Capital reported a net loss of USD 177 million for 2019, reflecting a USD 0.2 billion charge related to the agreement to sell ReAssure. Excluding this one-time accounting impact, net income rose to USD 53 million from USD 23 million in 2018.
As announced on 6 December 2019, Swiss Re entered into an agreement to sell ReAssure to Phoenix Group Holdings plc. The transaction, which is expected to close in mid-2020, subject to regulatory and antitrust approvals, valued ReAssure at GBP 3.25 billion and is a significant step for Life Capital in the transformation to a dynamically growing, digital B2B2C business.
Net premiums earned and fee income increased to USD 2.1 billion from USD 1.6 billion in the prior year, driven by growth in the open book businesses and changes to intragroup retrocessions. Gross premiums written of the open books increased by 22% in 2019, when measured at constant foreign exchange rates.
Life Capital generated gross cash of USD 1.1 billion in 2019 compared with USD 818 million in the prior year. The gross cash generated in 2019 was mainly driven by proceeds from the sale of subordinated bonds issued by ReAssure and the sale of a 10% stake in ReAssure to MS&AD Insurance Group Holdings Inc, partly offset by the impact of the ReAssure recapitalisation ahead of separation.
"Moving into 2020, we remain firmly committed to building resilience for our clients, communities and governments as they face significant and wide-ranging challenges. We will focus on completing the sale of ReAssure and improving the performance of Corporate Solutions through active portfolio pruning and rate increases. We remain confident in our ability to proactively address new industry developments and capture business opportunities while maintaining attractive shareholder returns."