July 31, 2020 by David Gambrill
Swiss Re today reported COVID-19 claims and reserves totalling $2.5 billion across the Group, resulting in a net loss of $1.1 billion in the first half of 2020 (all figures in U.S. dollars).
“Based on current information and a prudent analysis of our businesses, and recognizing the inherent uncertainty of the ongoing pandemic, we expect the claims and reserves we have booked in the first half of 2020 to cover the majority of our ultimate COVID-19 losses,” Swiss Re’s Group CEO Christian Mumenthaler reported in a statement to the media.
The company said claims and reserves related to the COVID-19 crisis impacted its P&C reinsurance result by $1.5 billion, reflecting affirmative non-damage business interruption, cancelled or postponed events, casualty and credit and surety losses.
“While the impact on our earnings is significant,” Mumenthaler said, “it remains manageable as our operations continue uninterrupted, all our businesses are performing well, and our capital position allows us to take advantage of attractive opportunities in an improving market.”
Swiss Re also reported a substantial impact on its property and casualty reinsurance (P&C Re) book from the record hailstorm in Alberta.
“Excluding COVID-19 claims and reserves, P&C Re’s net income amounted to $646 million in the first half of 2020, down from $771 million in the prior-year period, largely as a result of large natural catastrophe losses reported in the first quarter and the Calgary hailstorm in the second quarter,” the reinsurer reported.
Including COVID-19 claims and reserves, Swiss Re’s P&C operations reported a net loss of $519 million in the first half of 2020 and a COR of 115.8%.
The Group’s ROE amounted to 14.9% in the first half of 2020, excluding the impact of COVID-19 losses. Swiss Re said its P&C operations are on track to reach a “normalized” combined ratio estimate of 97% for the full year 2020.
Swiss reported a “successful” July 2020 P&C Re renewal, with premium volume up 6%, and “significant rate hardening in natural catastrophe business.”
Excluding COVID-19 claims and reserves, Swiss Re’s overall Group net income was $865 million in the first half of 2020. The reinsurer’s Group Swiss Solvency Test (SST) ratio exceeded the target level of 220% as of July 1, including the impact from the sale of ReAssure and COVID-19 losses.
Swiss Re closed its sale of ReAssure, a life and pensions company that buys and administers closed books of business from other companies, to Phoenix Group on 22 July 2020.