Swiss Re posted Q1 2021 profit of USD 333 million despite USD 1 billion Covid & NatCat losses

6 May 2021 — Andrei Victor
Despite the impacts of Coronavirus pandemic (losses of USD 643 million) and large natural disasters (USD 426 million), global reinsurer Swiss Re reported Q1 2021 profit of USD 333 million vs. a net loss of -EUR 225 million a year before.

The reinsurer mentioned in a statement, that excluding COVID-19 claims and reserves, Q1 2021 Group net income was USD 843 million and return on equity (ROE) of 12.9% vs. USD 158 million and 2.2% in March 2020.

"We have seen a solid start to 2021 and expect all our businesses to continue delivering a strong underlying performance with diminishing COVID-19 losses. I am particularly encouraged by the improving profitability in our property and casualty businesses, supported by strong renewals year to date in improving market conditions", said Christian Mumenthaler, Swiss Re's Group CEO.

Per business lines, P&C Re reported a net income of USD 477 million in the first quarter, up significantly from USD 61 million in the same period last year. "This is the result of continued price improvements and disciplined underwriting, which also contained the large natural catastrophe losses of USD 316 million, primarily relating to US winter storms. Excluding COVID-19 impacts, P&C Re's net income was USD 509 million".

P&C Re's net premiums earned increased by 5.7% to USD 5.0 billion, driven by strong new business growth in 2020, which continues to earn through in 2021.

The ROE was 21.6% and the combined ratio was 96.5%, despite higher-than-expected natural catastrophe losses as well as COVID-19 impacts. As a result of improving margins, P&C Re is on track to achieve its normalised combined ratio estimate of less than 95% in 2021.

The reinsurer mentioned, in April 2021, P&C Re renewed treaty contracts with USD 2.6 billion in premium volume. "This represents a 20% increase in volume compared with the business that was up for renewal, reflecting attractive transaction opportunities and pricing. P&C Re achieved a nominal price increase of 4% in this renewal round, more than offsetting lower interest rates and higher loss assumptions".

L&H Re business continued to see significant COVID-19-related losses of USD 570 million, driven by high mortality rates in the US and other countries, and reported a net loss of USD 184 million for the first quarter of 2021.

"In the US, the first three months of 2021 saw the highest mortality since the start of the pandemic, with more than 200 000 reported deaths from COVID-19. Since March, the average daily mortality has significantly declined as vaccination efforts progress".

Excluding COVID-19 claims and reserves, L&H Re's underlying business achieved very strong results, with a net income of USD 270 million and an ROE of 16.8%. This was supported by a strong underwriting performance across all regions and favorable investment results.

Net premiums earned and fee income increased by 13.8% to USD 3.8 billion, primarily driven by longevity transactions in the EMEA region.

For the first quarter of 2021, Corporate Solutions reported a net income of USD 96 million, compared with a net loss of USD 166 million in the prior-year period. Excluding the COVID-19-related impacts, net income was USD 112 million.

The ROE amounted to 16.2% and the combined ratio was 96.0%, despite higher-than-expected natural catastrophe losses of USD 110 million. As a result of disciplined underwriting, strict expense management and continued rate increases, the Business Unit is on track to achieve its targeted normalised4 combined ratio of less than 97% in 2021.

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