The full financial impact of the COVID-19 pandemic has become clearer this week as top insurers across the globe release their interim 2020 results and now it is the turn of reinsurance giant, Swiss Re. With claims and reserves related to the pandemic standing at US$2.5 billion (approx. NZ$3.74 billion) across the group, this has resulted in a net loss of US$1.1 billion (approx. NZ$1.65 billion) in the first half of 2020.
Despite these loss reserves, however, Swiss Re has maintained its industry-leading capital position in the first half of 2020, with a Group Swiss Solvency Test (SST) ratio above the target level of 220%.
Excluding COVID claims and results, group net income stands at US$865 million (approx. NZ$1295 million) for the period. Its property and casualty reinsurance business reported a net loss of US$519 million (approx. NZ$777 million), which, when excluding COVID-19 losses, posted a net income and return on equity (ROE) of US$646 million (approx. NZ$967 million) and 14.9% respectively. In July, successful P&C renewals have boosted premium volume by 6%.
Meanwhile, its corporate solutions business also posted a net loss of US$301 million (approx. NZ$450 million), which excluding COVID-19 losses, registered a net income of US$81 million (approx. NZ$121 million) with the group stating that the turnaround of the business is “well on track”. The successful closing of the ReAssure sale to Phoenix Group is also said to represent a key strategic milestone for the group.
Discussing these results, Swiss Re’s group CEO Christian Mumenthaler said the business shares its sympathies with those facing personal loss and financial uncertainty due to the COVID-19 crisis. He noted that Swiss Re is playing its part in facilitating the recovery from the crisis and working with many stakeholders to improve resilience to future systemic risks.
“Based on current information and a prudent analysis of our businesses, and recognising the inherent uncertainty of the ongoing pandemic, we expect the claims and reserves we have booked in the first half of 2020 to cover the majority of our ultimate COVID-19 losses,” he said. “While the impact on our earnings is significant, it remains manageable as our operations continue uninterrupted, all our businesses are performing well and our capital position allows us to take advantage of attractive opportunities in an improving market.”