Swiss reinsurer to focus on superior capitalisation and a stable or increasing dividend


Swiss Re Next building in Zurich, Switzerland. (Credit: Leonardo Finotti/Swiss Re)

Swiss Re said that the normalised combined ratio for its property and casualty reinsurance (P&C Re) unit is expected to improve at 96% or less in 2021.

The Switzerland-based reinsurance group said that it continues to navigate the Covid-19 crisis by adapting to a proactive reserving approach and by using its strong balance sheet.

It revealed that the P&C Re unit is looking for targeted growth opportunities in a hardening market. Swiss Re added that the unit is focused on growing underwriting margins, partly to neutralise the negative effects of lower interest rates.

Earlier this month, the reinsurer reported a net loss of $691m for the first nine months of 2020 (9M 2020). This was in comparison to a net profit of $1.34bn in 9M 2019.

For the third quarter of 2020, the firm posted net income of $444m. Its P&C Re unit reported 9M 2020 net premiums of $15.51bn.

The unit had been hit with a net loss of $201m in 9M 2020, in comparison to a net income of $880m in 9M 2019.

At the time of announcing the 9M 2020 results, Swiss Re said that the P&C Re division continues to be on track to achieve the normalised combined ratio estimate of 97% for the full year 2020.

The company, while unveiling its financial targets at its investors’ day, said that it was committed to a stable or increasing dividend in spite of the pandemic. The reinsurer also said that it plans to focus on superior capitalisation and a stable or increasing dividend.

Swiss Re Group CEO Christian Mumenthaler said: “We are optimistic on the outlook for all of our businesses as we see positive momentum in the underlying earnings power of the Group. Our confidence is underpinned by Swiss Re’s capital strength and the proactive approach we have taken to the Group’s COVID-19 reserves.

“We expect that COVID-19 will remain an earnings and not a capital event for the Group, with declining exposures going forward. We are focused on delivering on our financial targets and capital management priorities.”

The company said that its life and health reinsurance (L&H Re) business has sustained its successful track record in spite of the impact caused by Covid-19.

It also claimed that the turnaround of its corporate solutions unit is well on track, with the business expected to achieve a normalised combined ratio of 98% or less in 2021.