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Swiss Re reports net income of US$472m for 2022, targets more than $3bn for 2023


Global reinsurance giant Swiss Re has reported a net income of $472m for 2022, with a net income of $757m in the fourth quarter.

For 2023, the Group targets a net income of more than $3bn, supported by successful P&C Re renewals, an expected decline in COVID-19 claims, higher interest rates and cost discipline, the reinsurer says in a statement. Swiss Re's group CEO Christian Mumenthaler said, "2022 was a challenging year, marked by the war in Ukraine, surging inflation, the tail end of the COVID-19 pandemic and elevated natural catastrophe losses. We have focused on addressing these challenges proactively, all while maintaining our very strong capital position. This has enabled us to take advantage of attractive market conditions at the January renewals, while continuing our commitment to the ordinary dividend."


Swiss Re's group CFO John Dacey said, "Throughout the year, Swiss Re took measures to add $1.1bn in reserves to address the risk of higher claims due to economic inflation across our property and casualty businesses. Higher interest rates are already helping to compensate for this impact, with the contribution from our fixed-income portfolio rising by $170m in the fourth quarter compared with the prior-year period. After absorbing a significant impact from COVID-19 in the early part of 2022, L&H Re has returned to attractive levels of profitability. Corporate Solutions continued to deliver resilient results and outperformed its full-year target. We are pleased to end the year with a solid fourth-quarter result that was driven by strong operational performance from our main businesses."


Solid fourth-quarter performance supports group result


Swiss Re reported a net income of $472m and a return on equity (ROE) of 2.6% for the full-year 2022, supported by a net income of $757m in the fourth quarter. This compares with a net income of $1.4bn and an ROE of 5.7% for 2021. The decline was driven by the impact of economic inflation on actual and expected claims in the property and casualty businesses, mark-to-market impacts on listed equity investments and large natural catastrophe claims above expectations.


Net premiums earned and fee income for the Group rose 0.9% to $43.1bn in 2022 compared with the previous year. Growth was negatively affected by adverse foreign exchange developments, while at stable foreign exchange rates, the increase amounted to 5.3%.


Very strong capital position and rising recurring investment income


Swiss Re's ROI decreased to 2.0% from 3.2%, impacted by the decline in global equity markets and the associated mark-to-market adjustments. The recurring income yield increased to 2.6% for 2022 from 2.2% for 2021, benefitting from targeted reinvestments in the rising interest rate environment. In the fourth quarter, the recurring income yield rose to 3.0%, while the fixed income reinvestment yield reached 5.1%.


Swiss Re's capital position remained very strong, with the Group Swiss Solvency Test (SST) ratio above the 200–250% target range as of 1 January 2023.

A summary of Swiss Re's 2022 financial performance is as follows:

  • Property & Casualty Reinsurance (P&C Re) showed net income of $312m; combined ratio of 102.4% for 2022;

  • Life & Health Reinsurance (L&H Re) posted net income of $416m;

  • Corporate Solutions produced a net income of $486m; combined ratio of 93.1%

  • Return on investments (ROI) stood at 2.0%, reflecting the decline in global equity markets

  • P&C Re increased premium volume by 13% in the January 2023 renewals and achieved price increases of 18%

  • Solvency Test ratio exceeded the 200–250% target range as of 1 January 2023

  • Board of directors to propose a dividend of $6.40 per share at the Annual General Meeting on 12 April 2023.

Financial targets and outlook


For 2023, the Group targets a net income of more than $3bn, supported by attractive market conditions, an expected decline in COVID-19 claims, higher interest rates and cost discipline. Swiss Re aims to maintain its very strong capitalization in 2023, with a Group SST ratio materially above the target range, given the level of geopolitical and macroeconomic uncertainty. The Group also confirms its multi-year targets of 10% annual growth in economic net worth per share and 14% return on equity in 2024.


P&C Re will move away from its normalization approach to target a reported combined ratio of less than 95% for 2023; L&H Re will aim for a net income of approximately $900m; and Corporate Solutions will target a reported combined ratio of less than 94%.

Swiss Re's group CEO Christian Mumenthaler said, "2023 has started well, with successful January renewals reflecting our ambition to drive profitability and create value for shareholders, while continuing to support clients. Our investment portfolio is well-positioned to benefit from rising interest rates, and we do not expect a return of high COVID-19 claims that we had seen over the past years. Despite the uncertain macroeconomic environment, we are confident in the group's ability to deliver on the new ambitious targets."



Source: asiainsurancereview.com

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