Swiss Re sees “most pronounced” rate increases & 12% nat cat premium growth at 1/1

Global reinsurance giant Swiss Re grew its natural catastrophe reinsurance premiums by 12% at the January 2024 renewals, while finding the nat cat business had the “most pronounced” rate increases of its 1/1 renewal book.

Swiss Re reported its results this morning for full-year 2023, revealing $3.2 billion of net income and a 22% return on equity (ROE).

Swiss Re’s Group Chief Executive Officer Christian Mumenthaler commented on the result, “Swiss Re can look back on a successful 2023. We achieved all our financial targets in a year that was characterised by geopolitical turbulence and continued economic uncertainty. Improved price adequacy in our property and casualty businesses following strong renewals and our underwriting discipline helped us to manage elevated industry losses from natural catastrophes, while L&H Re achieved a solid result, benefitting from active in-force portfolio management and a strong investment performance.”

P&C reinsurance delivered $1.9 billion of the net income for 2023, well up on the prior years $312 million, with a combined ratio of 94.8% that was much better than 2022’s 102.4%.

“Disciplined renewals” through 2023 helped and even with a $1.3 billion natural catastrophe loss load, the profit was significantly up. Swiss Re also noted that strong margins and positive reserve developments in property and speciality lines helped offset the previously announced reserve strengthening in its casualty book.

At the January 2024 renewals, Swiss Re grew its P&C reinsurance book by 9% overall, with nat cat the main driver of rates, the company has said.

That equated to $13.1 billion in premium volume renewed at January 2024, with an overall price increase of 9% across the renewal portfolio.

However, the company noted that loss assumptions were up 11%, due to a prudent view on inflation and updated loss models.

Some 53% of SwissRe’s reinsurance treaty business renewed at January 2024 and Swiss Re said this came with “improved portfolio quality.”

In the natural catastrophe reinsurance business, Swiss Re renewed $2.2 billion in premiums, up 12% from $1.9 billion a year earlier, also saying that rate increases were “most pronounced in nat cat.”

The reinsurer said that “discipline was maintained on attachment points” and that its budget for large nat cat losses for 2024 has now been set at $1.8 billion.

Premium growth was stronger in the property reinsurance book at 16% and specialty lines stronger still at 19% premium volume growth at 1/1. Casualty was flat.

Regionally, Swiss Re’s main growth driver was EMEA, with a 14% surge in premium volumes, while the Americas was only up by 6% and Asia up 5%.

Looking ahead to the rest of 2024, Swiss Re said that it targets a group net income of $3.6 billion for the year, with a combined ratio target of below 87% for its P&C reinsurance business.

CEO Mumenthaler said, “In 2024, we continue to put emphasis on underwriting discipline as evidenced in the successful January renewals. Our focus on costs and strengthening proximity to our clients also remains paramount. Finally, the accounting transition from US GAAP to IFRS will be beneficial to our earnings and reported balance sheet strength.”