Swiss Re posts first-quarter net loss of USD 248 million

Ad hoc announcement pursuant to Article 53 LR

• Property & Casualty Reinsurance (P&C Re) net income of USD 85 million; combined ratio of 99.3% and normalised¹ combined ratio of 96.9%
• Successful P&C Re April 2022 renewals; treaty premium volume up 15%
• Life & Health Reinsurance (L&H Re) net loss of USD 230 million; COVID-19 claims of USD 501 million
• Corporate Solutions net income of USD 81 million; combined ratio of 95.2%
• Return on investments (ROI) of 0.7%, reflecting mark-to-market impacts on equity investments
• Reserves of USD 283 million related to the war in Ukraine

Swiss Re reported a net loss of USD 248 million for the first quarter of 2022, impacted by the war in Ukraine, heightened financial market volatility and the ongoing COVID-19 pandemic. Despite these headwinds, Swiss Re remains focused on achieving its financial targets for 2022.

Swiss Re's Group Chief Executive Officer Christian Mumenthaler said:
"The first quarter turned out to be a challenging one. Russia's invasion of Ukraine came as a shock, and our thoughts are with everyone impacted. While the situation remains highly uncertain and we do not believe we have an outsized exposure, we decided to take a proactive and cautious approach to establishing reserves for potential impacts from the war. Despite this and other headwinds in the quarter, Swiss Re's property and casualty businesses delivered robust underwriting results, and we remain focused on delivering on our financial targets for the year."

Swiss Re's Group Chief Financial Officer John Dacey said: "While the first quarter was impacted by negative equity mark-to-market movements, the recurring income yield remained stable at 2.1%. We expect our investment results to benefit from rising interest rates in the medium term. At the same time, the Group maintained its very strong capital position, enabling us to capture profitable growth opportunities in a supportive pricing environment."

Swiss Re reported a net loss of USD 248 million and an ROE of –4.6% for the first quarter of 2022, compared with a net income of USD 333 million and an ROE of 5.2% for the same period last year. The Group absorbed higher-than-expected large natural catastrophe claims of USD 524 million across its property and casualty businesses as well as COVID-19 claims of USD 515 million. In addition, Swiss Re booked USD 283 million in reserves related to the war in Ukraine.

At the same time, Swiss Re continued to grow net premiums earned and fee income for the Group, increasing it by 4.0% compared with the prior-year period to USD 10.6 billion in the first quarter of 2022.

Swiss Re's return on investments of 0.7% was impacted by equity mark-to-market losses as well as modest losses on Russia-related exposures. The recurring income yield of 2.1% demonstrates the quality and stability of the underlying asset portfolio.

Swiss Re's capital position remained very strong, with the Group Swiss Solvency Test (SST) ratio in the upper half of the 200–250% target range as of 1 April 2022.

P&C Re reported a net income of USD 85 million for the first quarter, compared with USD 481 million in the same period in 2021. The result reflects the robust technical performance of the business as well as lower investment results and reserves in relation to the Ukraine war of USD 154 million. In addition, P&C Re absorbed large natural catastrophe claims of USD 449 million, compared with USD 316 million in the prior-year period, mainly relating to February storms in Europe and flooding in Australia.

At the same time, P&C Re continued to improve efficiency, with net premiums earned increasing by 5.8% to USD 5.3 billion while costs remained stable. Premium growth was driven by continued price improvements as well as P&C Re's sustained focus on active portfolio management, partially offset by adverse foreign exchange developments.

The combined ratio was 99.3% for the first quarter. On a normalised basis, the combined ratio was 96.9%, and P&C Re remains focused on achieving the target of less than 94% for the full year.

P&C Re renewed contracts with USD 2.4 billion in treaty premium volume on 1 April 2022. This represents a 15% volume increase compared with the business that was up for renewal. Since the start of the year, P&C Re has achieved treaty premium volume growth of 8% and a price increase of 3%, which covers more conservative loss assumptions.

L&H Re reported a net loss of USD 230 million for the first quarter of 2022, compared with a net loss of USD 193 million for the first quarter of 2021. This reflects COVID-19 claims of USD 501 million and lower investment results. Overall, COVID-19 claims in the first quarter of 2022 were at the higher end of expectations, resulting from the persistently high mortality rates in the US in the first two months of the year.

Net premiums earned and fee income marginally decreased by 1.7% to USD 3.8 billion in the first quarter, primarily driven by adverse foreign exchange developments as well as one-off effects from an accounting reclassification.

With excess mortality in the US trending down significantly, L&H Re continues to target a net income of approximately USD 300 million for 2022.

For the first quarter of 2022, Corporate Solutions reported a net income of USD 81 million, compared with USD 96 million in the prior-year period. This solid result was achieved in spite of USD 129 million of reserves related to the Ukraine war – equalling a 9.3 percentage-point impact on the combined ratio – and significantly lower investment results. In addition, the Business Unit absorbed large natural catastrophe losses of USD 75 million, mainly driven by the flooding in Australia and the European winter storms in February.

Net premiums earned grew by 14.3% compared with the prior-year period to USD 1.4 billion in the first quarter of 2022. This was driven by the continuous earn-through of previously realised rate increases and new business growth in focus portfolios.

Corporate Solutions' combined ratio was 95.2% for the first quarter of 2022. The Business Unit maintains its combined ratio target of less than 95% for 2022 as it continues to focus on disciplined underwriting and strict expense management.

In the first quarter of 2022, iptiQ grew its gross premiums written by 38% compared with the same period last year to USD 230 million. This increase was primarily driven by the continued strong performance of its property and casualty business in the EMEA region as well as contributions from the life and health businesses in the US and EMEA.

Swiss Re's Group Chief Executive Officer Christian Mumenthaler said: "While the first quarter of 2022 presented significant headwinds for the re/insurance industry and Swiss Re, we are confident in the Group's ability to navigate the challenges. Thanks to the actions we have taken over the past years, our businesses have all the necessary levers in place to drive profitability and deliver against our financial targets for 2022."

¹ Normalised combined ratio assumes average large natural catastrophe loss burden and excludes prior-year reserve development.

² Results for 2021 have been revised to reflect the reallocation of part of Principal Investments, Admin RE US as well as certain cross-segmental loans from Group items to Reinsurance.

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The Swiss Re Group is one of the world's leading providers of reinsurance, insurance and other forms of insurance-based risk transfer, working to make the world more resilient. It anticipates and manages risk – from natural catastrophes to climate change, from ageing populations to cyber crime. The aim of the Swiss Re Group is to enable society to thrive and progress, creating new opportunities and solutions for its clients. Headquartered in Zurich, Switzerland, where it was founded in 1863, the Swiss Re Group operates through a network of around 80 offices globally.

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