Global reinsurance giant Swiss Re has reported its first-half 2018 financial results, announcing higher net income within its Property & Casualty Reinsurance (P&C Re) segment alongside solid premium growth.
Swiss Re has reported Group net income of $1 billion for the first-half of the year, down from the $1.2 billion reported a year earlier. Gross written premiums across the Group increased by 8% year-on-year, to $19.6 billion.
The reinsurer’s results announcement reveals that growth in its P&C Re segment supported its $1 billion net income for the first-half of the year.
P&C Re net income increased by 38% during the first six months of the year to $752 million, while the combined ratio strengthened from 97.4% in H1 2017, to 92.9% this year. Gross written premiums within this segment also increased in the period, by 1.8% to $9.6 billion.
The P&C Re annualised return on equity reached 14.5% in H1 2018, compared with 9.1% a year earlier.
The reinsurer explains that strong P&C Re results reflect stronger underwriting performance and the benign loss environment, aided by improved pricing metrics in the aftermath of 2017 catastrophe events.
Commenting on the July P&C reinsurance treaty renewals, the firm says that price quality improved by 2% and that rate increases were most notable in loss-affected property lines, with moderate increases seen in the majority of other regions and portfolios.
Year-to-date, Swiss Re says that treaty premium volume has increased by 9% to $14.4 billion.
“It is positive to see that the market environment is gradually recovering. We improved our profitability and underwriting performance, especially in P&C, and our solid results show the value of our diversified book of business. I’m also pleased that we were able to grow as a Group overall,” said Christian Mumenthaler, Swiss Re’s Group Chief Executive Officer (CEO).
Within Life & Health Reinsurance (L&H Re), Swiss Re reports that net income fell slightly to $398 million, while gross premiums written increased to $7.4 billion.
Swiss Re Corporate Solutions, the firm’s commercial risk transfer and insurance solutions provider, increased its net income to $58 million in H1 2018, and its gross written premiums increased to more than $2 billion. The unit’s combined ratio also strengthened in the period, although this did remain above profitable territory, at 101.7%.
Life Capital net income fell sharply from $143 million in H1 2017 to $34 million in the first-half of this year, while the unit generated gross cash of $848 million, compared with $532 for the same period last year.
John Dacey, Swiss Re Group’s Chief Financial Officer (CFO), commented: “We continued to experience volatility in our results due to the US GAAP accounting change, as previously communicated. Adjusting for the change, our results clearly show that the quality of the earnings has improved, especially our P&C underwriting performance. In addition, our investment result shows that we maintain a high-quality portfolio, demonstrated by our stable running yield. We continue to be very well capitalised and are ready for any challenge that lies ahead.”
The more favourable pricing metrics across the reinsurance sector, and particularly in the P&C space, in the aftermath of 2017 catastrophe events and in light of the benign loss experience so far in 2018, has clearly benefited a large, global player such as Swiss Re.
The reinsurer grew its premiums across its book during the first-half of 2018, and it will be interesting to see if the firm continues to expand throughout the remainder of the year, when catastrophe losses might not be so benign.
