Global reinsurance giant Swiss Re has said it expects its P&C Reinsurance Normalized Combined Ratio (P&C Re) to improve to 96% or less in 2021, as the company pursues targeted growth on a hardening market.
The Switzerland-based reinsurer is holding its Investor Day today, during which the company is expected to confirm its financial goals over the cycle and offer a positive outlook, driven by improving market conditions and targeted growth opportunities.
Swiss Re presents its reinsurance business as a “powerful franchise” with solid earnings dynamics. Within P&C Re, the company is targeting growth in the strengthening reinsurance market and focusing on expanding underwriting margins, in part to offset the low interest rate environment.
In 2021, Swiss Re’s P&C Re business is expected to improve its normalized combined ratio to 96% or less.
For the first nine months of the year, Swiss Re recorded an aggregate net loss of $ 691 million, with its P&C Re segment posting a loss of $ 201 million and a combined ratio of 110.3%. Throughout the year, the performance of the reinsurer was strongly impacted by the COVID-19 pandemic.
For the 9 months of 2020, Swiss Re announced that its life and health reinsurance business (L&H Re) recorded a net profit of $ 72 million. Today, the reinsurer notes that L&H Re has maintained its track record of success despite the impacts of the pandemic.
The unit has achieved a strong generation of new business, the company notes, and with its active management of the business in effect, is laying the groundwork for future growth in underlying earnings.
Far from its reinsurance activities, Swiss Re notes that the management measures announced last year in its Corporate Solutions branch are the driving force behind the company’s successful recovery. As a result, Swiss Re expects the company to achieve a normalized combined ratio below or equal to its target of 98% in 2021.
The company highlights the difficult and pronounced market landscape, noting that this provides the unit with opportunities for profitable growth in areas where it has a competitive advantage.
Of course, the ongoing COVID-19 pandemic has also hit the balance sheet assets of insurers and reinsurers. For Swiss Re, proactive management has helped it cope with market volatility in 2020, with the Group’s return on investment remaining strong despite the lower interest rate environment in the longer term. Swiss Re says this has been supported by its commitment to environmental, social and governance (ESG) principles.
In addition, Swiss Re believes that the defensive positioning of its asset management portfolio, together with the significantly reduced financial market risk profile of Swiss Re following the sale of ReAssure, offers it the opportunity to improve performance. investments in the future.
Swiss Re Group CEO Christian Mumenthaler said: “We are optimistic about the prospects for all of our businesses as we see positive momentum in the underlying earnings power of the Group. Our confidence is based on the strength of Swiss Re’s capital and on the proactive approach we have taken with regard to the Group’s COVID-19 reserves. We anticipate that COVID-19 will remain a profit and not a momentous event for the Group, with decreasing exposures in the future.
“We strive to meet our financial goals and our capital management priorities. At the same time, our strategy positions Swiss Re for long-term success. “
The global reinsurer also highlights its pursuit of risk partnerships to unlock new long-term opportunities, noting that its white-label digital insurance platform, iptiQ, continues to grow. Based on the segment’s current growth trajectory and peer reviews, the implicit market valuation of iptiQ has increased to approximately $ 2 billion.