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Swiss Re Ltd / Key word(s): Half Year Results
Ad hoc announcement pursuant to Article 53 LR
Zurich, 29 July 2022 – Swiss Re returned to profitability in the second quarter of 2022, with a net income of USD 405 million. After the first quarter was marked by negative impacts from the financial market downturn, the COVID-19 pandemic and reserving for the war in Ukraine, this resulted in a net income of USD 157 million for the first half of 2022.
Swiss Re's Group Chief Executive Officer Christian Mumenthaler said: "After a challenging start to the year, Swiss Re returned to profitability in the second quarter. This was supported by strong results in Life & Health Reinsurance and Corporate Solutions, as well as robust underwriting performance in Property & Casualty Reinsurance."
Swiss Re's Group Chief Financial Officer John Dacey said: "Rising interest rates are clearly positive for the re/insurance sector, and we are starting to see the benefits come through in our recurring income yield. With respect to inflationary trends, we remain vigilant and are taking appropriate actions, including increasing the pricing of new business and the related initial loss expectations."
Group results significantly improve in the second quarter, despite ongoing challenges in financial markets
Swiss Re reported a net income of USD 157 million and an ROE of 1.6% for the first half of 2022, compared with a net income of USD 1.0 billion and an ROE of 8.2% for the same period in 2021. The decline was driven mainly by significantly lower investment results as well as first-quarter reserves for the Ukraine war.
After establishing reserves of USD 283 million for potential impacts from the war in Ukraine in the first quarter, Swiss Re did not increase them in the second quarter.
Net premiums earned and fee income for the Group increased 1.9% to USD 21.2 billion in the first six months of 2022 from USD 20.8 billion in the first half of 2021. Growth was negatively affected by adverse foreign exchange developments, while at stable foreign exchange rates, net premiums earned would have increased by 5.1%.
Swiss Re's recurring income yield increased to 2.3% in the first half of 2022 from 2.2% for the full year 2021, benefiting from targeted reinvestments in the rising interest rate environment. The fixed income reinvestment yield increased markedly to 3.1% in the second quarter of 2022 from 0.9% for the full year 2021. The return on investments of 1.2% in the first half of 2022 was impacted by listed equity mark-to-market losses (net of hedges) of approximately USD 0.4 billion as well as modest impairments of USD 50 million including Russia-related exposures.
Swiss Re's capital position remained very strong, with the Group Swiss Solvency Test (SST) ratio above the 200–250% target range.
P&C Re's technical underwriting performance remains robust
P&C Re reported a net income of USD 316 million for the first half of 2022, compared with USD 1.3 billion in the same period in 2021. The result reflects the robust technical underwriting performance of the business, offset by materially lower investment results and first-quarter reserves in relation to the Ukraine war of USD 154 million.
P&C Re absorbed large natural catastrophe claims of USD 938 million in the period, mainly relating to flooding in Australia and South Africa, February storms in Europe, and a series of hailstorms in France in June. Total claims came in USD 0.27 billion above expectations for large natural catastrophe losses in the first half of the year. Importantly, P&C Re has USD 1.2 billion of the USD 1.9 billion full-year natural catastrophe budget allocated for the remainder of 2022.
Net premiums earned increased slightly to USD 10.6 billion. The increase was largely due to higher volumes and price increases, offset by adverse foreign exchange developments. At stable foreign exchange rates, net premiums earned would have increased by 3.6%.
The combined ratio was 98.5% for the first half of 2022. On a normalised basis, the combined ratio was 95.8%, which includes 1.5 percentage points for the reserves relating to the war in Ukraine. For the second half of the year, the normalised combined ratio is expected to be lower, as the Group earns the majority of its natural catastrophe premiums in the third and fourth quarters. P&C Re remains focused on achieving the normalised combined ratio target of less than 94% for the full year.
Successful July P&C Re renewals
P&C Re renewed contracts with USD 4.8 billion in treaty premium volume on 1 July 2022. The business achieved a price increase of 12% in this renewal round. This fully offset higher loss assumptions, which reflect a clear view on inflation and other changes in exposure. Since the start of the year, P&C Re has achieved treaty premium volume growth of 3% and a price increase of 6%, focusing on profitable growth in natural catastrophe and specialty lines.
L&H Re returns to profitability in the second quarter
L&H Re reported a net income of USD 2 million for the first half of 2022, compared with a net loss of USD 129 million2 for the first half of 2021. As deaths from COVID-19 declined sharply, L&H Re returned to a strong net income of USD 232 million in the second quarter, underscoring the earnings power of its franchise.
Over the half-year period, total COVID-19 claims amounted to USD 540 million, with the vast majority booked in the first quarter.
Net premiums earned and fee income decreased slightly to USD 7.5 billion in the first half from USD 7.6 billion in the prior-year period, primarily driven by adverse foreign exchange developments. At stable foreign exchange rates, net premiums earned would have increased by 2.8%.
L&H Re continues to target a net income of approximately USD 300 million for 2022.
Corporate Solutions continues to deliver strong results
Corporate Solutions reported a net income of USD 220 million in the first half of 2022, compared with USD 262 million in the prior-year period. This result was achieved in spite of reserves related to the Ukraine war in the first quarter, less favourable prior-year development compared with the first half of 2021 and lower investment income.
Total large losses for the first half of 2022 were of a similar magnitude to the prior-year period. Large man-made losses of USD 165 million were higher than in the prior-year period, reflecting the first-quarter reserves for the war in Ukraine of USD 129 million, while large natural catastrophe losses were lower, amounting to USD 102 million for the period.
Net premiums earned increased by 12.8% to USD 2.9 billion, driven by the continuous earn-through of previously realised rate increases and new business growth in selected focus portfolios. At stable foreign exchange rates, net premiums earned would have increased by 17.2%.
Corporate Solutions' combined ratio of 93.2% for the first half of 2022 is well on track to reach the full-year target of less than 95%.
The Business Unit successfully closed the sale of its life insurance subsidiary Elips Life AG to Swiss Life International on 1 July 2022. Excluding the divested business, the Business Unit's pro forma combined ratio was 90.9% in the first half of 2022.
iptiQ's growth momentum continues
Swiss Re's Group Chief Executive Officer Christian Mumenthaler said: "Thanks to the actions we have taken over the past years, all our businesses are well positioned and focused on achieving their segmental targets for the year. The achievement of the Group targets is highly dependent on the performance of financial markets and large-loss experience in the second half of 2022. Our very strong capital position and excellent client franchise enable us to capture further profitable growth opportunities in a supportive pricing environment."
Details of H1 2022 performance
Media conference call
Swiss Re will hold a virtual media conference this morning at 10:30 CEST. You can join the media conference via your computer or Teams mobile app here: Microsoft Teams Meeting. Alternatively, you can dial in (audio only) using the below numbers and conference ID:
Conference ID: 487 692 527#
Switzerland: +41 (0) 43 210 5761
United Kingdom: +44 (0) 20 3443 6271
Germany: +49 (0)69 3650 5756 8
France: +33 (0)1 7037 8776
Hong Kong: +852 3704 2823
For additional local dial-in numbers, please click here.
Investor and analyst call
Swiss Re will hold an investors' and analysts' call at 14:00 CEST, which will focus exclusively on Q&A. You are kindly requested to dial into the conference call 10–15 minutes prior to the start using the following numbers:
Switzerland: +41 (0) 58 310 5000
 Normalised combined ratio assumes average large natural catastrophe loss burden and excludes prior-year reserve development.
 Comparative information for 2021 has been revised to reflect the reallocation of part of Principal Investments, Admin Re US as well as certain cross-segmental loans from Group items to Reinsurance.
 Pro forma Corporate Solutions combined ratio of 90.9% excludes all Elips Life AG business sold to Swiss Life International for the first half of 2022 and includes the medical business of Elips Versicherungen AG in Ireland, which remained with Swiss Re.
Cautionary note on forward-looking statements
End of ad hoc announcement
Swiss Re Ltd
+41 (0) 43 285 71 71
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