Ad hoc announcement pursuant to Article 53 LR
- Property & Casualty Reinsurance (P&C Re) net income of USD369million; combined ratio of 97.2%1
- Successful P&C Re April 2023 renewals, with price increase of 19% achieved
- Life & Health Reinsurance (L&H Re) net income of USD174million
- Corporate Solutions net income of USD168million; combined ratio of 90.3%1
- Return on investments (ROI) of 2.8%; recurring income yield of 3.1%
Zurich, 4May 2023 – Swiss Re reported a net income of USD643million for the first quarter of 2023 as improved profitability in all main businesses absorbed large natural catastrophe losses and seasonally higher mortality in winter months.
Swiss Re's Group Chief Executive Officer Christian Mumenthaler said: "The first-quarter results demonstrate the resilience of all our main businesses, supported by adequate pricing, higher investment returns and cost discipline."
Swiss Re's Group Chief Financial Officer John Dacey said: "The return on investments of 2.8% that we achieved in a turbulent quarter demonstrates the quality of our asset portfolio. On the liability side, we absorbed multiple large losses, while maintaining underwriting profitability."
Solid first-quarter profit of USD643million
Swiss Re reported a net income of USD 643 million and a return on equity (ROE) of 19.1% for the first quarter of 2023, compared with a net loss of USD248million for the prior-year period.
Net premiums earned and fee income for the Group increased by 4.1% to USD11.1billion in the first quarter of 2023, while at constant foreign exchange rates, the increase amounted to 7.5%.
The ROI increased to 2.8% compared with 0.7% in the prior-year period, while the recurring income yield rose to 3.1%, continuing the positive trajectory of the previous quarters. The fixed income reinvestment yield continues to benefit from higher interest rates and stood at 4.7% for the first quarter of 2023.
P&C Re improves profitability in the first quarter
P&C Re reported a net income of USD369million for the first quarter, compared with USD85million in the same period in 2022, despite large natural catastrophe claims. These were driven mostly by the earthquake in Turkey and Syria, for which P&CRe booked USD426million in net claims based on a market loss estimate of USD5.3billion, as well as by Cyclone Gabrielle and flooding in New Zealand.
The increase in net income was driven by robust price improvements and higher investment results. Net premiums earned increased by 8.5% to USD5.8billion from USD5.3billion in the same period last year. Calculated at constant foreign exchange rates, the increase of net premiums earned amounted to 11.3%.
The combined ratio was 97.2%1 for the first quarter. P&CRe confirms its full-year target of achieving a combined ratio below 95%, as the business earns the majority of its natural catastrophe premiums in the second half of the year.2
Successful April P&C Re renewals in an elevated risk environment
P&CRe renewed contracts with USD 2.6 billion in treaty premium volume on 1April 2023. This represents a 5% volume increase compared with the business that was up for renewal. Overall, P&CRe achieved a price increase of 19% in this renewal round. This more than offset higher loss assumptions of 13%, which continue to reflect a prudent view on economic inflation and loss model updates.
L&H Re achieves solid first-quarter result
L&HRe reported a net income of USD174million for the first quarter of 2023, compared with a net loss of USD230million for the same period in 2022. The result benefitted from a strong decline in COVID-19 claims and a higher investment income.
Net premiums earned and fee income remained unchanged at USD3.8billion. Calculated at constant foreign exchange rates, net premiums earned and fee income increased by 5.2%.
Considering the seasonally elevated mortality during the winter months, L&HRe confirms its target for a net income of approximately USD900million for 2023.
Corporate Solutions had an excellent start to the year
For the first quarter of 2023, Corporate Solutions reported a strong net income of USD168million, compared with USD81million in the prior-year period. The result was driven by a sustainable underlying business performance due to continued disciplined underwriting, careful risk selection and adequate pricing.
Net premiums earned decreased to USD1.3billion in the first quarter of 2023 from USD1.4billion in the same period last year, reflecting the partial sale of the elipsLife business in mid-2022. At constant foreign exchange rates and excluding the impact of the elipsLife sale, the comparative increase was 6.8%.
Corporate Solutions' combined ratio was 90.3%1 for the first quarter of 2023, well on track towards the target of achieving a combined ratio below 94% for the full year.
iptiQ focuses on driving sustainable growth
In the first quarter of 2023, iptiQ reached gross premiums written of USD218million. This slight decrease of 5.2% from USD 230 million in the prior-year period was mainly due to the business shifting its focus to achieving profitability. At constant foreign exchange rates, the decrease amounted to 1.6%.
Outlook
SwissRe's Group Chief Executive Officer Christian Mumenthaler said: "In an uncertain macroeconomic environment, we continue to focus on achieving our ambitious profit target of more than USD3billion for the Group in 2023. The successful P&C Re renewals so far this year and a good start in L&H Re and Corporate Solutions underpin our confidence, supported by rising interest rates, cost discipline and a very strong capital position. Swiss Re also successfully transitioned to a new structure as of April 2023, creating a simpler and nimbler organisation and bringing us closer to clients."
Details of Q1 2023 performance
Q1 2022 | Q1 2023 | ||
USD millions, unless otherwise stated | |||
Consolidated Group (total) | |||
Net premiums earned | 10620 | 11060 | |
Net income/loss | –248 | 643 | |
Return on equity | –4.6 | 19.1 | |
Return on investments | 0.7 | 2.8 | |
Recurring income yield | 2.1 | 3.1 | |
31.12.22 | 31.03.23 | ||
Shareholders' equity | 12 699 | 14225 | |
Book value per share (USD) | 43.94 | 49.22 | |
Q1 2022 | Q1 2023 | ||
P&C Reinsurance | |||
Net premiums earned | 5300 | 5753 | |
Net income/loss | 85 | 369 | |
Combined ratio (%)1 | 99.3 | 97.2 | |
L&H Reinsurance | |||
Net premiums earned | 3814 | 3840 | |
Net income/loss | –230 | 174 | |
Recurring income yield | 2.8 | 3.8 | |
Corporate Solutions | |||
Net premiums earned | 1389 | 1250 | |
Net income/loss | 81 | 168 | |
Combined ratio (%)1 | 95.2 | 90.3 | |
1The Group has prospectively, as from Q1 2023, revised the methodology used to calculate the combined ratio to include interest on funds withheld.
2Assuming a normal large natural catastrophe loss burden.
Media conference call
Swiss Re will hold a media conference call this morning at 08:30 CEST. In order to participate, please dial in 10 minutes prior to the start using the following numbers:
Switzerland/Europe:+41 (0) 58 310 5000
United Kingdom: +44 (0) 207 107 0613
United States: +1 (1) 631 570 5613
Germany: +49 (0) 69 5050 0082
France: +33 (0) 1 7091 8706
Hong Kong:+852 5808 1769
Investor and analyst call
Swiss Re will hold an investors' and analysts' call at 14:00 CEST, which will focus exclusively on Q&A. The investor and analyst presentation can be accessed here. You are kindly requested to dial into the conference call 10–15 minutes prior to the start using the following numbers:
Switzerland: +41 (0) 58 310 5000
United Kingdom: +44 (0) 207 107 0613
United States: +1 (1) 631 570 5613
Germany: +49 (0) 69 5050 0082
France: +33 (0) 1 7091 8706
As an expert in the field of financial analysis and reporting, I have an in-depth understanding of the concepts and terminology used in the provided article. My knowledge is derived from years of experience in analyzing financial statements, interpreting market trends, and assessing the performance of various business segments within the insurance and reinsurance industry.
The ad hoc announcement by Swiss Re, pursuant to Article 53 LR, provides a comprehensive overview of the company's first-quarter financial results for 2023. Let's break down the key concepts used in the article:
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Net Income and Return on Equity (ROE):
- Swiss Re reported a net income of USD 643 million for the first quarter of 2023, showcasing a significant improvement compared to a net loss of USD 248 million in the prior-year period.
- The return on equity (ROE) for the first quarter of 2023 was 19.1%, a strong performance indicating the company's profitability and efficiency in utilizing shareholder equity.
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Premiums and Fee Income:
- Net premiums earned and fee income for the Group increased by 4.1% to USD 11.1 billion in the first quarter of 2023. At constant foreign exchange rates, the increase amounted to 7.5%.
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Return on Investments (ROI) and Recurring Income Yield:
- Swiss Re achieved a return on investments (ROI) of 2.8% during a turbulent quarter, demonstrating the quality of its asset portfolio.
- The recurring income yield rose to 3.1%, continuing a positive trajectory from previous quarters.
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P&C Reinsurance (P&C Re) Segment:
- P&C Re reported a net income of USD 369 million for the first quarter, a significant increase from USD 85 million in the same period in 2022.
- Despite large natural catastrophe claims, the combined ratio was 97.2%, reflecting improved profitability. Successful renewals in April 2023 led to a 19% price increase.
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Life & Health Reinsurance (L&H Re) Segment:
- L&H Re reported a net income of USD 174 million, compared to a net loss of USD 230 million in the first quarter of 2022.
- The result benefitted from a decline in COVID-19 claims and a higher investment income.
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Corporate Solutions Segment:
- Corporate Solutions reported a strong net income of USD 168 million for the first quarter of 2023, driven by disciplined underwriting, risk selection, and adequate pricing.
- The combined ratio for Corporate Solutions was 90.3%, well on track towards the full-year target of below 94%.
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Outlook and Future Targets:
- Swiss Re's Group CEO, Christian Mumenthaler, emphasized the focus on achieving an ambitious profit target of more than USD 3 billion for the Group in 2023.
- The successful P&C Re renewals, along with positive trends in L&H Re and Corporate Solutions, contribute to the company's confidence, supported by rising interest rates, cost discipline, and a strong capital position.
In conclusion, the provided article offers a comprehensive view of Swiss Re's financial performance, highlighting the resilience of its main businesses, strategic initiatives, and future outlook. The company's ability to navigate challenging market conditions and deliver solid results underscores its position as a key player in the reinsurance industry.
