Swiss Re remains resilient amid climate and economic challenges

In the face of escalating climate disruption and persistent economic uncertainty, Swiss Re has demonstrated resilience, delivering a significant dividend increase for 2024 while managing claims exceeding $37 billion across the Group, Jacques de Vaucleroy Chairman of the Board of Directors and Andreas Berger, Group Chief Executive Officer, highlighted in their recent Letter to shareholders.

In 2024, the reinsurer reported a robust full-year net income of $3.2 billion and a 15% return on equity (ROE). This strong result was achieved during a year in which Swiss Re took decisive action to boost overall Property & Casualty reserves to the higher end of its best-estimate range.

The Group’s earnings power and strong capitalisation, the reinsurer stated, supported the Board of Directors’ decision to propose an 8% dividend increase, the executives noted.

While the reinsurer experienced net income growth in 2024, it also had to manage a year where natural catastrophe losses surpassed $100 billion.

This marks the fifth consecutive year that natural catastrophe losses have exceeded this threshold, a level that has now become the “new normal,” according to Swiss Re.

In a world where devastating wildfires, powerful storms, and geopolitical instability have become defining features of the risk landscape, Swiss Re has paid out a staggering $37 billion in claims in 2024 alone, acting as a crucial “shock absorber.”

The dividend increase, reaching $7.35 per share, signals confidence in the company’s ability to face these challenges. However, it also raises questions about the long-term sustainability of such payouts in a world where catastrophic events are becoming increasingly commonplace.

The company’s decision to bolster its P&C reserves by $2.6 billion underscores the gravity of the situation. While it might impact short-term profitability, this move highlights the company’s commitment to long-term resilience.

Furthermore, Swiss Re’s strong capital position, with a Swiss Solvency Test (SST) ratio of 257%, provides a buffer against future shocks.

However, the company’s warnings about the “turbulent start to 2025,” citing the Los Angeles wildfires and European winter storms, suggest that the challenges are far from over.

Swiss Re’s full-year return on investments (ROI) saw a substantial increase, rising to 4.0% in 2024 from 3.2% in 2023. This improvement was fuelled by a continued contribution from recurring income, where the yield rose to 4.0% from 3.5% in 2023.

The reinvestment yield for the fourth quarter was even higher, reaching 4.6%. Overall, Swiss Re’s investment portfolio showed continued improvement in 2024.

As part of its asset management activities, Swiss Re also stated its commitment to sustainability with the achievement of a 50% reduction in the carbon intensity of its investment portfolio.

The reinsurer’s noted that robust underwriting performance of Property & Casualty Reinsurance (P&C Re) was impacted by net prior-year reserve additions of $2.6 billion for 2024.

Nevertheless, the Business Unit reported net income of $1.2 billion, compared with $1.5 billion in 2023.

P&C Re achieved an insurance service result of $1.8 billion versus $2.8 billion in 2023, and a combined ratio of 89.9%3, which fell short of the target of less than 87% for 2024 following decisive third quarter reserve strengthening, Swiss Re noted.

Corporate Solutions and Life & Health Reinsurance (L&H Re) also delivered strong performances in 2024. Corporate Solutions saw its net income increase 26% and L&H Re achieved
its net income target of $1.5 billion.

Swiss Re also announced its withdrawal from the iptiQ digital insurance platform, aligning with its focus on core businesses. The company’s commitment to sustainability remains a priority, with the publication of its Climate Transition Plan in the Sustainability Report 2024.

Berger and de Vaucleroy stated: “Our businesses have begun the year in a strong position, and we remain focused on delivering on our 2025 financial targets announced in December 2024. The Group aims for a net income of more than $4.4 billion, while L&H Re targets a net income of $1.6 billion.

“P&C Re targets a combined ratio of less than 85% and Corporate Solutions targets a combined ratio of less than 91%. The Group maintains its multi-year ROE target of more than 14% and aims for dividend per share growth of 7% or more per year in the 2025–2027 period.”

P&C reinsurance pricing is expected to remain attractive, with growing demand for protection in an elevated risk environment.

On 1 January 2025, P&C Re renewed treaty contracts resulting in $13.3 billion in premium volume, reflecting a 7% volume increase compared to the business up for renewal. The resulting portfolio quality is consistent with the Group’s 2025 financial targets.

“For 2025, Swiss Re is continuing its focus on improving profitability through underwriting excellence and cost discipline. We are resolute in our commitment to strengthening key processes, boosting our efficiency and serving our clients’ needs as we work toward extending Swiss Re’s role as a reinsurance industry leader,” Berger and de Vaucleroy concluded.

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