Global reinsurer Swiss Re Group has become the latest to report its year end results for 2020 and has posted a net loss of US$878 million (approx. AU$1.123 billion) compared to a profit of US$727 million (approx. AU$929.9 million) for year end 2019. The reinsurer highlighted, however, that excluding COVID-19 claims and reserves (pre-tax) of US$3.9 billion, the group’s net income rose to US$2.2 billion with a return on equity of 7.3%.
Swiss Re noted that 2020 saw strong underlying growth for the business with gross premiums written up 2% year on year, and premiums earned and fee income up 6% from 2019.
The group’s property and casualty reinsurance arm saw a net loss of US$247 million last year, excluding COVID this would have been a net income of US$1.3 billion, and a combined ratio of 109%, up from 107.8% in 2019. The reinsurer revealed that price increases of 6.5% achieved in January 2021 renewals and a focus on portfolio quality are showing an improved 2021 normalised combined ratio of less than 95%.
Swiss Re’s life and health reinsurance arm posted a net income of US$71 million for 2020 and the company stated its Corporate Solutions turnaround was ahead of plan with a net loss of US$350 million, an improvement on 2019’s net loss of US$647 million. Its Life Capital business showed a net loss of US$265 million and the successful closure of its ReAssure sale delivered a dividend of US$1.5 billion for the group.
Based on these results, the board of directors will propose a dividend of CHF 5.90 per share at its AGM on April 16, 2021. Swiss Re has also decided to replace its 220% Group SST target ratio with a target range of 200–250%.
Swiss Re’s group CEO Christian Mumenthaler emphasised the global impact of the COVID crisis and said the group has played its role as a shock absorber with confidence and strength. He noted that the reinsurer took a prudent approach at the start of the pandemic to build reserves as claims have been slow to come in and that, while further COVID losses are expected in 2021, the business has significantly reduced relevant exposures in P&C lines.
“I am very encouraged by broad-based improvements in portfolio quality and underwriting margins in P&C Re and Corporate Solutions, including in the January renewals,” he said.
Swiss Re stated it expects additional COVID-19-related claims and reserves in its P&C businesses of less than US$0.5 billion in 2021, based on current information, but noted that with so much uncertainty, actual claims developments could be impacted either positively or negatively.
Swiss Re’s group CFO John Dacey said: “Our capital position remained very strong throughout 2020, despite the unprecedented impact from COVID-19 and an unusually high frequency of natural catastrophes. Swiss Re’s businesses continued to run without disruptions, delivering a strong underlying performance. Together with a positive outlook, this allows us to propose a stable dividend payment to our shareholders even in these challenging times.”