Swiss Re reported consolidated net income of USD 333 million in the first quarter of 2021, despite heightened losses in its life and health reinsurance business related to COVID and property and casualty reinsurance losses from U.S. catastrophes.
The company said the strong underlying performance of all businesses more than offset losses related to COVID- 19 (USD 643 million) and large natural catastrophes (USD 426 million).
Excluding COVID-19-related claims and reserves, Swiss Re’s net income was USD 843 million.
The quarter marked a return to profitability for its property/casualty reinsurance business as well as its commercial insurance business unit Corporate Solutions.
In addition, the reinsurer reported increases in April renewals of property/casualty contracts.
“The start of 2021 has seen record numbers of COVID-19-related deaths in many countries, and our thoughts go out to those who have lost a loved one. The devastating human toll of the pandemic is also reflected in the financial results of Swiss Re as the world’s largest life and health reinsurer,” Swiss Re’s Group Chief Executive Officer Christian Mumenthaler said.
L&H Re continued to see significant COVID-19-related losses of USD 570 million, driven by high mortality rates in the U.S. and other countries, and reported a net loss of USD 184 million for the quarter.
In the U.S., the first three months of 2021 saw the highest mortality since the start of the pandemic, with more than 200,000 reported deaths from COVID- 19. Since March, the average daily mortality has significantly declined as vaccination efforts progress.
Excluding COVID-19 claims and reserves, L&H Re’s underlying business achieved very strong results, with a net income of USD 270 million and an ROE of 16.8%.
Robust results for property/casualty reinsurance reflected a focus on underwriting margins and continued price improvements.
P&C Re reported a net income of USD 477 million in the first quarter, up significantly from USD 61 million in the same period last year. This result also contained the large natural catastrophe losses of USD 316 million, primarily relating to U.S. winter storms. Excluding COVID-19 impacts, P&C Re’s net income was USD 509 million.
P&C Re’s net premiums earned increased by 5.7% to USD 5.0 billion, driven by strong new business growth in 2020, which the company said it continues to earn through in 2021.
The P&C Re combined ratio was 96.5%, despite higher- than-expected natural catastrophe losses as well as COVID-19 impacts.
“The return to profitability this quarter in our property and casualty businesses underlines the earnings potential of our diversified business model. We effectively absorbed the heightened mortality impact on our life and health business and maintained a very strong capital position,” commented Swiss Re’s Group Chief Financial Officer John Dacey.
For the first quarter of 2021, commercial insurance unit Corporate Solutions reported net income of USD 96 million, compared with a net loss of USD 166 million in the prior-year period, reflecting a continuation of the turnaround achieved in 2020 and the diminishing impact of COVID-19-related losses. Excluding the COVID-19-related impacts, net income was USD 112 million.
Net premiums earned remained stable at USD 1.2 billion, as realised rate increases and growth in selected areas offset the impact of previous portfolio pruning measures. The strong pricing momentum experienced in 2020 continued in the first quarter of 2021, with Corporate Solutions achieving risk-adjusted price increases of 13%.
The combined ratio was 96.0%, despite higher-than-expected natural catastrophe losses of USD 110 million.
In April 2021, P&C Re renewed treaty contracts with USD 2.6 billion in premium volume, which represents a 20% increase in volume compared with the business that was up for renewal, reflecting attractive transaction opportunities and pricing. P&C Re achieved a nominal price increase of 4% in this renewal round, more than offsetting lower interest rates and higher loss assumptions.
Source: Swiss Re
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