Swiss Re reports Q2 combined ratio of 101%, large nat cat losses of US$350M

Swiss Re Ltd. reported Friday its combined ratio in property and casualty reinsurance deteriorated 8.1 points, from 92.9% in the second quarter of 2015 to 101% in the three months ending June 30, due in part to losses from wildfires in Northern Alberta and earthquakes in Japan.

Swiss Re CEO Christian Mumenthaler speaking at a press conference announcing the company’s recent financial results. (PPR/Siggi Bucher)

“The first two quarters of 2016 were mainly impacted by the wildfires in Canada and the earthquakes in Japan that occurred in the second quarter, as well as rate reductions and overall lower reserves releases than in the first half of 2015,” Swiss Re reported.

In Alberta, a wildfire that started in early May resulted in the evacuation of about 80,000. Estimated by Catastrophe Indices and Quantification Inc. to have caused Cdn$3.58 billion in insured damage, the wildfire was “by far the largest insured natural catastrophe in Canadian history,” Insurance Bureau of Canada vice president western and Pacific Bill Adams said July 6.

Swiss Re’s net pre-tax loss estimated for the Alberta wildfire was US$220 million, Swiss Re Group CEO Christian Mumenthaler said July 29 on a conference call.

“Together with the losses from the earthquakes in Japan and the floods in Europe, overall large natural catastrophe losses added up” to about US$350 million, Mumenthaler added.

On April 14, two earthquakes measuring about 6 on the Richter scale struck west of Kumamoto, Japan, Guy Carpenter and Company reported earlier. Those tremors killed 65, Japan Fire and Disaster Management Agency said at the time.

Aon plc reported earlier that in late May and early June, storm Elvira caused flooding, killing at least 17. Affected countries included Germany, France, Austria, Poland and Belgium.

Swiss Re reported July 29 that during the first six months of 2016, it had a combined ratio, in P&C reinsurance, of 97.2%, up 8.9 points from 88.3% in the same period of 2015.

The entire Swiss Re group had premiums earned and fee income of $16.118 billion during the first six months of the year, compared to $14.706 billion during the first six months of 2015. All figures are in United States dollars.

In the first six months of this year, premiums earned were $5.695 billion in life and health reinsurance, $1.74 billion in corporate solutions, $591 billion in life capital and $8.092 billion in P&C reinsurance (up 11.3% from $7.27 billion in the first half of 2015).

“The increase was driven by large and tailored transactions in the U.S and Europe, partially offset by unfavourable foreign exchange movements,” Swiss Re said of the year-over-year increase in P&C reinsurance premiums.

Company-wide, net income was $1.866 billion during the first half of 2016, down from $2.26 billion during the first half of 2015.

During the latest quarter, Swiss Re reported premiums earned in P&C reinsurance of $4.136 billion, compared to $3.503 billion in Q2 2015.

Group-wide, Swiss Re reported $8.178 billion in premiums and fee income in Q2 2016, up from $7.144 billion in Q2 2015. The firm reported net income of $737 million on total revenues of $11.293 billion in Q2 2016, compared to net income of $820 million on revenue of $7.624 billion in Q2 2015.

Swiss Re also reported July 29 treaty premium volume for July treaty renewals “increased by 10%, while the year-to-date volume has increased by 18%, driven by large and tailored transactions.”

In a press release, Swiss Re added: “The price environment for property and casualty reinsurance continued to be challenging, with continued price erosion in property. Therefore, Swiss Re has reduced natural catastrophe capacity in specific segments, including U.S. hurricane. Even though abundant capital continues to pressure rates, it does so to a much lesser extent than previously.”

Swiss Re also announced Friday its board proposes to elect a new member, Jacques de Vaucleroy, at its next annual general meeting, April 21, 2017. De Vaucleroy was AXA Group’s chief executive officer for the Northern, Central and Eastern Europe region of AXA Group (France) until June 2016. A Belgian citizen with a masters degree in business law, de Vaucleroy worked for 24 years at ING before AXA in 2010.