Global reinsurance giant Swiss Re reported its results for the first half of 2022 this morning and revealed the desire to continue to grow in the natural risk business, as it remains one of the main players to maintain its main focus on protecting people from disasters and weather.
Some major insurance and reinsurance companies are currently moving away from property risks, as evidenced by SCOR and Everest in their results this week.
But Swiss Re has been showing an increase in exposure to cats, writing more business as the financial insurance market has grown.
Recently, Thierry Léger, the company’s Chief Underwriting Officer, said that pricing is now tight in the natural disaster recovery space, but the tightening is expected to continue for two years or more.
Swiss Re has been leveraging its ability to partner with third-party investors while growing its catastrophe book, using catastrophe bonds and other reinsurance solutions and expanding through its insurance-linked insurance services (ILS) on. The opinion of the company Swiss Re Insurance-Linked Investment Management Ltd.
Reporting its results this morning, Swiss Re revealed a return to profitability after its first quarter was hit by losses related to disasters, Covid-19 and the conflict in Ukraine.
The second quarter was the most profitable period for the reinsurer, which made it possible to report $ 405 million of profit in Q2 alone, which has driven $ 157 million of good income for the first half.
Swiss Re’s Property & Casualty Reinsurance (P&C Re) segment reported net income for the first half of 2022 of $316 million with a combined ratio of 98.5%, which stabilized at 95.8%.
Commercial risk insurance underwriting division Corporate Solutions delivered $220 million in premiums with a combined margin of 93.2%.
In addition, Swiss Re managed to return 1.2% on its investment in the first half, despite the market downturn and economic factors around the world.
Group Chief Executive Officer of Swiss Re Christian Mumenthaler said, “After a difficult start to the year, Swiss Re returned to profitability in the second quarter. This was supported by strong results in Life & Health Reinsurance and Corporate Solutions, as well as strong writing in Property & Casualty Reinsurance. “
Swiss Re’s Group Chief Financial Officer John Dacey added, “Rising interest rates are good for the insurance industry, and we are starting to see a positive return on our earnings. In terms of inflation, we remain vigilant and are taking appropriate action, including raising rates for new business.” that’s what’s expected of a first loss.”
There was no increase in Swiss Re’s war-related positions in Ukraine in Q2, but the company suffered $938 million in risk assets in the first half of the year.
Despite this, the P&C reinsurance unit remains profitable in the first half, with revenues of $316 million.
Forecasts of disaster came above the budget, but thanks to the way Swiss Re budgets for cats in the first and second half of the year, the company has $ 1.2 billion left in H2 2022.
Overall, P&C reinsurance income rose slightly to $10.6 billion in the first half, but growth was strong in other areas of Swiss Re’s business.
At the July 1st reinsurance renewals, Swiss Re renewed $4.8 billion in volume premium contracts, at an additional cost of 12%.
Most importantly, the lender said, “This eliminates the worst-case scenario, which shows very well the rise in inflation and other changes in exposure.”
Since 2022, Swiss Re’s P&C Reinsurance group has achieved growth of 3%, on a 6% increase in premiums, which it said was focused on “profitable growth in natural disasters and special lines.”
Year over year, Swiss Re saw $3.3 billion in natural insurance premiums for renewals, but the company estimates it has written about 23% more, about $4 billion, over that period.
The growing nature of the natural hazard business presents an alternative to other competitors who are currently holding back on cat risks.
It is possible that Swiss Re’s higher share than some of its competitors means that it has more diversification and believes that it can absorb nat cat losses better, without being too volatile.
But the growth of cat reinsurance also comes with a smart shift to the upper reaches of reinsurance platforms, seeking to reshape the trend.
Swiss Re said that its growth in the nat cat business in the July update was in line with the growth that took place in January and April, and explained that it has shifted its strength to high-quality sectors that show a beautiful economy.
As we mentioned, the company has also been using other ways to raise money, so it will be interesting to see if the company continues to promote its cat-friendly program throughout the rest of the year.
On the other hand, Swiss Re has reduced its payout in the similar assets business in the restructuring this year, as it aims to reduce the rate of inflation.
Again, it’s a little different in approach, since some of the players who are reducing the risk of cats, have been expanding their books accordingly.
Commenting on the coming year, CEO Christian Mumenthaler said, “Thanks to our achievements in the past years, all our businesses are in good shape and are focused on achieving their annual goals. The achievement of the Group’s goals is highly dependent on the performance of the financial markets and significant losses in the second half of 2022. Our very strong capital position and excellent customer franchise allow us to seize additional profitable opportunities in price support areas.”