Swiss Re Q1 profit tops forecasts as P&C re, CorSo eclipse life losses
Swiss Re reported P&C re net profit of $477mn for Q1, more than seven times that of the same period last year, while Corporate Solutions returned to profit.
The group reported return on equity (RoE) of 5.2%, as opposed to analyst expectations of a loss of -0.75%, as compiled by S&P. Jefferies analyst Philip Kett noted that the group net income of $333mn was far greater than a consensus of $4mn, driven by a strong underwriting result.
Covid-19: Without the impact of Covid-19, the P&C re unit would have reported $509mn in net profit, while the group would have reported $843mn rather than $333mn. During the quarter, the bulk of Covid-19 losses came from mortality claims in the life and health segment, at an above-forecast $570mn, with $45mn arising in the P&C unit for event cancellation, BI and other lines, and $19mn from Corporate Solutions (CorSo). In both cases the P&C losses were below analysts’ expectations. The total impact was in line with forecasts at $643mn.
P&C Re: The P&C re unit’s profit of $477mn was a significant improvement on last year’s $61mn, which the carrier put down to price improvements and underwriting discipline. The top line grew by 5.7% to $5bn. The combined ratio for the unit was 96.5%, a 14.3-point improvement on the prior-year period.
P&C Re claims: The unit reported $316mn in nat cat claims, primarily driven by US winter storms.
P&C Re renewals: The P&C re segment renewed $2.6bn in treaty contracts at the 1 April renewal, a 20% increase in volume year on year, with a nominal price increase of 4%, which Swiss Re said more than offsets lower interest rates and higher loss assumptions.
CorSo: The primary unit swung from a loss of $166mn in Q1 2020 to a profit of $96mn, as remedial efforts continue to take effect. Net premiums at CorSo contracted marginally to $1.2bn.
Swiss Re group CFO 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.”
CEO 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.“