Swiss Re reports solid start to 2021 despite COVID impact

• Posts first-quarter net income of $ 333 million, driven by strong underlying performance of all businesses

Swiss Re has reported a Group net income of $ 333 million in the first quarter of 2021, as the strong underlying performance of all businesses more than offset losses related to COVID-19 ($ 643 million) and large natural catastrophes ($ 426 million). Excluding COVID-19-related claims and reserves, Swiss Re’s net income was $ 843 million.

Swiss Re’s Group Chief Executive Officer Christian Mumenthaler said: “The start of 2021 has seen record numbers of COVID-19-related deaths in many countries, and our thoughts go out to those who have lost a loved one. The devastating human toll of the pandemic is also reflected in the financial results of Swiss Re as the world’s largest life and health reinsurer. As we continue to support our clients and communities affected by the pandemic, the underlying performance of all our businesses remains very strong and underpins our confidence.”

Swiss Re’s Group Chief Financial Officer John Dacey said: “The return to profitability this quarter in our property and casualty businesses underlines the earnings potential of our diversified business model. We effectively absorbed the heightened mortality impact on our life and health business and maintained a very strong capital position.”

Swiss Re achieved a strong ROI of 3.5% in the first quarter of 2021. The investment result was driven largely by recurring income supplemented by gains from equity valuations. The result reflected an effective balance of active management and preservation of sustainable income.

P&C Re reported a net income of $ 477 million in the first quarter, up significantly from $ 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 $ 316 million, primarily relating to US winter storms. Excluding COVID-19 impacts, P&C Re’s net income was $ 509 million.

P&C Re’s net premiums earned increased by 5.7% to $ 5 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 normalised1 combined ratio estimate of less than 95% in 2021.

In April 2021, P&C Re renewed treaty contracts with $ 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 continued to see significant COVID-19-related losses of $ 570 million, driven by high mortality rates in the US and other countries, and reported a net loss of $ 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 $ 270 million and an ROE of 16.8%. This was supported by a strong underwriting performance across all regions and favourable investment results.

Net premiums earned and fee income increased by 13.8% to $ 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 $ 96 million, compared with a net loss of $ 166 million in the prior-year period2, reflecting a continuation of the successful turnaround achieved in 2020 and the diminishing impact of COVID-19-related losses. Excluding the COVID-19-related impacts, net income was $ 112 million.

Net premiums earned remained stable at $ 1.2 billion, as realised rate increases and growth in selected areas offset the impact of previous portfolio pruning measures. The strong pricing momentum experienced in 2020 continued in the first quarter of 2021, with Corporate Solutions achieving risk-adjusted price increases of 13%3.

The ROE amounted to 16.2% and the combined ratio was 96.0%, despite higher-than-expected natural catastrophe losses of $ 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.

iptiQ continued its strong track record of growth in the first quarter of 2021. Compared with the same period last year, gross premiums written for the core business rose by 150% to $ 167 million, as iptiQ expanded its property and casualty business in the EMEA region.

Swiss Re’s Group Chief Executive Officer Christian Mumenthaler said: “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.”