Swiss Re posts strong H1’24 results despite reserve additions

Global reinsurer Swiss Re has today reported profit of $996 million and net income of $2.1 billion for the first half of 2024, as the firm’s property and casualty (P&C) and life and health (L&H) reinsurance businesses performed well in the period.

Swiss Re attributes the reported net income and an ROE of 20.1% for H1 2024 to disciplined underwriting, low claims from natural catastrophes, and strong investment income.

Group-wide, insurance revenue totalled $22.5 billion and the insurance service result, which reflects underwriting profitability, hit $2.9 billion.

The return on investments was also strong in H1 2024 at 4%, which the firm attributes to contributions from recurring income.

Within the P&C reinsurance arm, performance was strong in H1 2024 with net income of $989 million on the back of disciplined underwriting and a low large natural catastrophe experience. P&C Re insurance revenue was $9.8 billion for H1 2024.

In P&C Re, the firm has reported a favourable large nat cat impact of $600 million, offset by $500 million additions across natural catastrophe and man-made loss reserves in property and specialty, the large majority of which were in the form of IBNR reserves. P&C Re also increased reserves on specific casualty lines to the tune of $650 million. The prudence Swiss Re is building into reserves is important and is being described as positive by investors, as it better protects the company going forwards.

The segment’s insurance service result hit $1.4 billion with a combined ratio of 84.5%. For the full-year, Swiss Re is targeting a combined ratio below 87%.

At the July renewals, Swiss Re’s P&C Re renewed contracts with $4.5 billion in treaty premium volume, which represents a 7% volume increase compared with the business that was up for renewal. P&C Re achieved a price increase of 8% in the July 1st renewal round. Additionally, based on a continued prudent view on inflation and updated loss models, loss assumptions increased by 10%, says the firm.

Turning to the company’s L&H reinsurance business, and net income totalled $883 million in the first half of 2024, which reflects a positive US mortality experience and higher investment income, partially offset by unfavourable developments in the EMEA region.

The L&H Re segment produced insurance revenue of $8.7 billion and an insurance service result of $1 billion, with the reinsurer targeting net income of around $1.5 billion for the full year.

Within Swiss Re Corporate Solutions, the commercial insurance arm of the reinsurer, net income hit $435 million in H1 2024, and insurance revenue was $3.8 billion. The reinsurer explains that nominal rates increased by approximately 3% for the first half of the year, remaining flat on a risk-adjusted basis.

Large nat cat losses of $138 million in Corporate Solutions were mainly driven by the Noto earthquake in Japan and Tropical Cyclone Megan in Australia. The business generated an insurance service result of $509 million and a combined ratio of 88.7% for the first half of 2024, and is targeting a combined ratio of less than 93% for the full year.

“Swiss Re’s performance in the first half of 2024 reflects our focus on delivering consistent results. We continue to increase the overall resilience of the firm through a disciplined approach to underwriting new business while remaining on top of loss trends across our in-force portfolios,” said Andreas Berger, Group CEO.

“These results highlight our focus on capital allocation discipline and quality across our underwriting and investment portfolios. Additionally, higher interest rates continue to benefit our investment income,” commented Group CFO, John Dacey.

“After a strong start in the first half of this year, we maintain our 2024 targets, including Group net income of more than USD 3.6 billion. Amid a challenging macroeconomic and geopolitical environment, we continue to focus on disciplined underwriting to maintain and where possible improve the resilience of our portfolios to enable delivery of consistent results,” added Berger.

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