Swiss Re has reported a net income of US$472m for 2022, with a net income of $757m in the fourth quarter, after high nat cat- and Covid-19-related claims, as well as the war in Ukraine.
For 2023, the group is targeting a net income of more than $3bn, supported by successful P&C Re renewals, an expected decline in Covid-19 claims, higher interest rates and cost discipline.
Swiss Re’s Group chief executive officer Christian Mumenthaler said: “2022 was a challenging year, marked by the war in Ukraine, surging inflation, the tail end of the Covid-19 pandemic and elevated natural catastrophe losses.
“We have focused on addressing these challenges proactively, all while maintaining our very strong capital position. This has enabled us to take advantage of attractive market conditions at the January renewals, while continuing our commitment to the ordinary dividend.”
Swiss Re’s Group chief financial officer John Dacey added: “Throughout the year, Swiss Re took measures to add $1.1bn in reserves to address the risk of higher claims due to economic inflation across our property and casualty businesses.
“Higher interest rates are already helping to compensate for this impact, with the contribution from our fixed-income portfolio rising by $170m in the fourth quarter compared with the prior-year period.”
He continued: “After absorbing a significant impact from Covid-19 in the early part of 2022, L&H Re has returned to attractive levels of profitability. Corporate Solutions continued to deliver resilient results and outperformed its full-year target. We are pleased to end the year with a solid fourth-quarter result that was driven by strong operational performance from our main businesses.”
Mr Mumenthaler concluded: “2023 has started well, with successful January renewals reflecting our ambition to drive profitability and create value for shareholders, while continuing to support clients. Our investment portfolio is well-positioned to benefit from rising interest rates and we do not expect a return of high Covid-19 claims that we had seen in the past years. Despite the uncertain macroeconomic environment, we are confident in the group’s ability to deliver on the new ambitious targets.”
Solid fourth-quarter performance supports group result
Swiss Re reported a net income of $472m and a return on equity (ROE) of 2.6% for the full-year 2022, supported by a net income of $757m in the fourth quarter. This compares with a net income of $1.4bn and an ROE of 5.7% for 2021.
Net premiums earned and fee income for the group rose 0.9% to $43.1bn in 2022 compared with the previous year. Growth was negatively affected by adverse foreign exchange developments, while at stable foreign exchange rates the increase amounted to 5.3%.
Swiss Re’s ROI decreased to 2% from 3.2%, impacted by the decline in global equity markets and the associated mark-to-market adjustments. The recurring income yield increased to 2.6% for 2022 from 2.2% for 2021, benefitting from targeted reinvestments in the rising interest rate environment. In the fourth quarter, the recurring income yield rose to 3%, while the fixed-income reinvestment yield reached 5.1%.
P&C Re reported a net income of $312m for 2022, supported by a strong fourth-quarter net income of $595m.
Large natural catastrophe claims were above expectations at $2.7bn, mainly from Hurricane Ian, floods in Australia and South Africa, hailstorms in France, winter storms in Europe and the US as well as a series of other smaller events. Net premiums earned increased slightly to $22bn, supported by continued price improvements over the year. Calculated at stable foreign exchange rates, the increase of net premiums earned amounted to 4.1%.
The reported P&C Re combined ratio was 91% in the fourth quarter and 102.4% for the full year. The normalised combined ratio for 2022 was 96.9%, above the target of less than 94%, mostly due to the impacts of economic inflation.
P&C Re renewed treaty contracts with $10.2bn in premium volume on 1 January 2023. This represents a 13% volume increase compared with the business that was up for renewal. Healthy growth of 21% was achieved in the natural catastrophe book.
Overall, P&C Re achieved a price increase of 18% in this renewal round, with improved rates in all lines of business.
L&H Re reported a net income of $416m for 2022, compared with a net loss of $478m in the previous year. L&H Re’s fourth-quarter net income reached $0.2bn for the third consecutive quarter, thereby ensuring that the full-year net income target of approximately $300m could be exceeded. Covid-19-related claims decreased to $588m in 2022 from almost $2bn in 2021.
Net premiums earned and fee income for 2022 were largely unchanged at $15bn, compared with the prior year. Calculated at stable foreign exchange rates, net premiums earned increased by 5.1%.
Corporate Solutions reported a net income of $486m for 2022. The resilient result reflects a robust underlying business performance and strong new business growth in selected focus portfolios. The result was impacted by elevated large man-made loss activity including impacts related to the war in Ukraine and significantly less favourable prior-year developments.
Net premiums earned increased 2.6% to $5.5bn, driven by new business growth in selected focus portfolios along with the continuous earn-through of previously-realised rate increases. At stable foreign exchange rates and excluding the elipsLife business sold mid-year, net premiums earned increased 14.8%.
Corporate Solutions’ combined ratio was 93.1% for the full year, outperforming the target of less than 95% for 2022.
iptiQ continued to successfully grow its business in 2022, increasing its in-force policies to more than 2.1-million from 1.6-million in the prior-year period. Gross premiums written increased by 17.7% from the previous year to $851m, with contributions across all regions. At stable foreign exchange rates, growth of 27.8% was achieved.
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