Swiss Re Group: net loss of USD 878 million for 2020 confirmed; confident outlook for 2021

19 February 2021 — Alexandra GUZUN
Business closings, event cancellation and mortality were the main drivers of the COVID-19 USD 3.9 billion losses, mostly incurred in Q2 and Q4, that have significantly affected Swiss Re's financial result for 2020, pushing it in negative territory.

"The easiest way to explain the result of last year of USD -0.9 billion is to talk about two separate parts: one is the COVID-19 impact which has a USD 3.9 billion pre-tax impact and the USD 2.2 billion excluding COVID-19. This was a very good number, we are happy with that", declared Christian Mumenthaler, Swiss Re's Group Chief Executive Officer.

"The COVID-19 pandemic continues to affect communities and businesses across the globe. The start of vaccination efforts brings hope that the situation will improve soon. Our Group has gone through this crisis with confidence and strength, and in our role as a shock absorber we are doing our part to help mitigate the challenges of the pandemic and improve resilience to future systemic risks", declared Christian.

The outlook on underlying performance remains positive, however COVID-19 pandemic is still ongoing. The normalized combine ratio of 97% estimated in January 2020 was extremely closed to that, so the company was able to continue to improve the quality of the portfolio.

The Life & Health Reinsurance (L&H Re) achieved a solid underlying performance. Excluding COVID-19 claims and reserves, L&H Re's net income was USD 855million in 2020, supported by a strong investment result with an ROI of 3.7%. ROE was 10.4%, excluding the impact of COVID-19.

Swiss Re expects additional COVID-19-related claims and reserves in its property and casualty businesses of less than USD 0.5 billion in 2021, based on current information. The uncertainty surrounding many factors related to the pandemic remains high and may impact actual claims developments either positively or negatively.

Corporate Solutions turnaround ahead of plan and continues to benefit from strong pricing trends and rebalancing of portfolio. Excluding COVID-19 losses, net income increased to USD 393 million in 2020, with an ROE of 16.5% and a combined ratio of 93.2%. This is a result of disciplined underwriting, strong pricing trends, strict expense management, continued rate increases, favorable prior-year developments and lower-than-expected large man-made losses.

Also, Property & Casualty Reinsurance (P&C Re) results were impacted by COVID-19 and other large losses take place, but the underlying performance was strong. Excluding COVID-19 claims and reserves, P&C Re's net income was USD 1.3 billion in 2020, up from USD 396 million in 2019. The ROE (Return on Equity), excluding COVID-19 losses, was 13.2%.

"From the start of the pandemic, we took a disciplined and prudent approach to building reserves as actual claims have been slow to come in. 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,"Swiss Re's Group Chief Executive Officer Christian Mumenthaler said.

Even in the unprecedented times, Swiss Re proposes a stable dividend, CHF 5.90 per share for 2021 and the capital management priorities remain unchanged: to ensure superior capitalisation at all times and maximise financial flexibility; grow the regular dividend with long-term earnings, and at a minimum maintain it; deploy capital for business growth where it meets the company strategy and profitability target.

The full Financial results can be viewed on the www.swissre.com

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