COVID-19 impacts Swiss Re’s resultsBy Aurélia Morvan | May 05 2020 10:50AM
Swiss Re has reported a negative result for the first quarter of the year, due to the COVID-19 pandemic.
The insurance and reinsurance company reported a net loss of USD 225 million in Q1 2020. This figure represents a 152% plunge, or USD 654 million less than the net earnings of USD 429 million reported in the first quarter of 2019.
This sharp decrease reflects the consequences of COVID-19 on results in two areas. First, property and casualty underwriting sustained an impact of USD 476 million before taxes. Second, investments saw a USD 300 million net decrease due to financial market volatility. The sale of the ReAssure Group to Phoenix Group Holdings also weighed on Swiss Re’s results, to the tune of USD 251 million before taxes.
P&C reinsurance immune to COVID-19
In its property and casualty reinsurance sector, Swiss Re reported net earnings of USD 61 million in Q1 2020, up from $13 million in Q1 2019. This equals a staggering increase of 369%.
Swiss Re explains that this segment “remained profitable” despite a USD 253 million charge linked to COVID-19, and that “reserves were established primarily for expected claims for cancelled or postponed events.”
The segment also saw a “large loss” of USD 397 million linked to natural catastrophes, an amount that “somewhat exceeded the expected losses for the quarter.” This loss was caused by flooding and hail in Australia, along with a winter storm in Europe.
Net earned premiums in this sector rose 12% compared with Q1 2019, to reach USD 4.7 billion. This sector had a combined ratio of 110.8%, up from 110.3% at the same period in 2019.
Life reinsurance declines
In its life and health reinsurance sector, Swiss Re reported net income of USD 299 million in Q1 2020, down from $328 million in Q1 2019. This amounts to a 9% decline.
Swiss Re says that COVID-19 had no material impact on claims in this sector during the quarter.
Net premiums earned and fee income were USD 3.4 billion, up 8% from Q1 2019.
Corporate insurance in the red
For its corporate solutions sector, Swiss Re reported a net loss of USD167 million in Q1 2020, versus a net loss of USD55 million in Q1 2019. This amounts to a 204% downturn. The company attributes this result to the reserving for claims linked to COVID-19, which totalled USD223 million.
Net premiums earned in this sector dipped 3% compared with the same quarter in 2019, to reach $986 million. The sector posted a combined ratio of 125.8%, versus 116.3% in the same period in 2019.
Impact of the sale of ReAssure Group
For its Life capital sector, Swiss Re reported a net loss of USD261 million for Q1 2020, compared with net income of $7 million in the first quarter of 2019. Swiss Re links this staggering drop of over 3,000% to the impact of the sale of ReAssure Group to Phoenix Group Holdings.
Swiss Re obtained a £1.2 billion cash payment from this transaction. The reinsurer will also receive shares of Phoenix Group Holdings when the sale is finalized. Incidentally, the stock value was eroded by the pandemic.
Net premiums earned and fee income in this segment were USD497 million, for a 9% downturn compared with Q1 2019.