Swiss Re reports net income of USD 2.5 billion for first nine months of 2023

Ad hoc announcement pursuant to Article 53 LR

• Property & Casualty Reinsurance (P&C Re) net income of USD 1.5 billion; combined ratio of 94.3%¹
• Life & Health Reinsurance (L&H Re) net income of USD 634 million
• Corporate Solutions net income of USD 492 million; combined ratio of 91.3%¹
• Return on investments (ROI) of 3.5%; Q3 recurring income yield increased to 3.7%
• Very strong capital position with Group Swiss Solvency Test (SST) ratio of 314% as of 1 July 2023

With a profit of USD 1 billion in the third quarter, Swiss Re reported a net income of USD 2.5 billion and a return on equity (ROE) of 25.9% for the first nine months of 2023. This compares with a net loss of USD 285 million and an ROE of –2.1% for the first nine months of 2022. The significant improvement was mainly driven by the underwriting performance in P&C Re and L&H Re, supported by increasing investment results.

Net premiums earned and fee income for the Group increased by 4.2% to USD 33.7 billion in the first nine months of 2023, compared with USD 32.4 billion in the prior-year period. At constant foreign exchange rates, net premiums earned and fee income grew by 5.3%.

The Group achieved a return on investments (ROI) of 3.5% in the first nine months of 2023, compared with 1.6% in the prior-year period. In the third quarter, the ROI was exceptional at 4.8%, supported by net realised gains stemming from real-estate sales, which were partially offset by losses from targeted sales of lower-yielding fixed-income securities. Overall, the investment portfolio continues to benefit from higher interest rates. The recurring income yield reached 3.7% in the third quarter, while the fixed income reinvestment yield settled at 4.9%.

Swiss Re's capital position remained very strong, with a Group Swiss Solvency Test (SST) ratio of 314% as of 1 July 2023.

P&C Re reported a net profit of USD 1.5 billion for the first nine months of 2023, compared with a net loss of USD 283 million in the prior-year period. The significant earnings improvement was driven by the underwriting performance on the back of successful renewals and rising investment income.

In the third quarter, P&C Re achieved a combined ratio of 93.7% despite a substantial level of large natural catastrophe losses for the industry. The business absorbed negative prior-year developments of USD 151 million, reflecting significant additions to US liability reserves, the majority of which were assumption-driven².

Large natural catastrophe claims amounted to USD 1.1 billion in the first nine months of 2023³, compared with USD 2.5 billion in the same period in 2022. USD 421 million is attributed to the third quarter, mainly relating to severe weather events in Europe, wildfires on the Hawaiian Island of Maui and the earthquake in Morocco.

Net premiums earned in the first nine months of 2023 increased to USD 17.4 billion, compared with USD 16.6 billion in the prior-year period. At constant foreign exchange rates, net premiums grew by 5.4%.

P&C Re's combined ratio for the first nine months of 2023 was 94.3%¹, significantly improving from 106.1% in the prior-year period.

L&H Re reported a third-quarter profit of USD 241 million. Elevated large individual claims were offset by a strong investment result. Net income increased significantly to USD 634 million for the first nine months of 2023, compared with a profit of USD 221 million in the prior-year period, primarily due to a decline in mortality claims related to COVID-19.

Net premiums earned and fee income increased to USD 11.7 billion in the first nine months of 2023, compared with USD 11.2 billion in the prior-year period. At constant foreign exchange rates, net premiums earned and fee income grew by 6.1%.

L&H Re continues to target a net income of approximately USD 900 million for 2023.

Corporate Solutions reported a net income of USD 492 million in the first nine months of 2023, compared with USD 356 million in the prior-year period. The increase reflects a continued strong underlying business performance, complemented by lower-than-expected large natural catastrophe losses, and a higher investment result.

Large man-made losses amounted to USD 153 million and losses from large natural catastrophes reached USD 86 million in the first nine months of 2023. Both amounts were significantly lower than in the prior-year period, which was marked by a significant reserve for the war in Ukraine and higher participation in natural catastrophe events.

Net premiums earned decreased to USD 4.0 billion in the first nine months of 2023 from USD 4.1 billion in the prior-year period, reflecting the partial sale of the elipsLife business in mid-2022. At constant exchange rates and excluding the impact of the elipsLife sale, the comparative increase was 7.4%, driven by new business growth in selected focus portfolios, partially offset by conscious reductions in professional liability lines.

Corporate Solutions’ combined ratio was 91.3% for the first nine months of 2023¹.

iptiQ's growth accelerated in the third quarter with gross premiums written amounting to USD 771 million in the first nine months of 2023, up from USD 650 million in the prior-year period, and now has over 2.3 million policies in force.

Swiss Re's Group Chief Executive Officer Christian Mumenthaler said: "In light of the good performance year to date, we maintain our targets for the full year including a Group net income of more than USD 3 billion. We continue to focus on our disciplined underwriting strategy that provides a strong base for the future."

¹ The Group has prospectively, as from 1 January 2023, revised the methodology used to calculate the combined ratio to include interest on funds withheld.
² Assumption-driven reserve increases represent additions to incurred but not reported (IBNR) reserves.
³ Net of reinstatement premiums of USD 52 million.

* Full-year 2022 press release and analyst presentation.

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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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