Insurance companies Swiss Re earns significantly more in the first half of the year

Swiss Re's cash registers were ringing in the first half of the year. On balance, the world's second-largest reinsurer posted a profit of 2.1 billion dollars. This is significantly more than in the previous year (1.8 billion).

The Group benefited from the relatively low burden of major losses and a strong result on the capital markets, as Swiss Re announced in a press release on Thursday. While the underwriting result was only slightly better than in the previous year, Swiss Re was able to improve its result on the capital markets by a good 38 percent to 2.2 billion dollars.

The higher interest rates continued to have a positive effect on investment income, explained CFO John Dacey. The return on investments improved on an annualized basis to 4.0 percent after 2.7 percent in the previous year.

More turnover

Revenue was also higher. The newly reported insurance turnover following the changeover to IFRS accounting standards amounted to 22.5 billion dollars. Swiss Re reported a figure of 21.8 billion for the previous year.

The largest line of business, property and casualty reinsurance (P&C Re), posted a profit of 989 million dollars, which is slightly more than in the previous year (973 million). The combined ratio deteriorated to 84.5 percent from 81.8 percent in the previous year. With values of less than 100 percent, the business is profitable in actuarial terms.

This result was mainly due to the disciplined underwriting of reinsurance contracts and the low number of major claims caused by natural disasters. The investment result was also strong.

In the property and specialty lines, on the other hand, the low level of claims from natural catastrophes in the first half of the year was partially offset by the selective increase in reserves for natural catastrophes and man-made major losses, according to the statement. Swiss Re had made this increase for losses that had occurred but had not yet been reported. P&C Re also increased the reserves for certain liability lines.

The treaty renewals in July were successful, the Group wrote. Price increases of 8 percent were achieved.

Life business with jump in profits

In the life reinsurance business (L&H Re), the Group achieved a profit according to IFRS of 883 million dollars. This is a massive increase compared to the previous year (604 million dollars). The division benefited from lower mortality rates in the USA and higher investment income, it was reported.

The corporate insurance division Corporate Solutions (Corso) improved its profit to 435 million from 317 million dollars. The result was boosted by a favorable claims experience in the first six months of the year and strong investment income. The combined ratio improved to 88.7 percent from 89.2 percent in the previous year.

However, the exit from the digital insurance platform Iptiq, which was founded in 2016, had a negative impact. This made a loss of 182 million dollars in the first half of the year.

Annual targets unchanged

Swiss Re therefore believes it is well on track to achieve its annual targets: The reinsurer still aims to achieve an IFRS consolidated profit of more than 3.6 billion dollars.

It is aiming for a combined ratio of less than 87 percent in the P&C Re segment and less than 93 percent in the Corporate Solutions primary insurance segment. The life division is expected to generate a profit of around 1.5 billion dollars.