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What happened? Swiss Re''s Q2 conference call focused on: 1) the outlook for insurance revenue and life experience variances in the short-term; and 2) Swiss Re''s ability to grow its PandC book over the longer term especially in light of the cycle dynamics. The insurance revenue guidance for H2 was more positive, albeit consensus still appears stretched. Further Life assumption updates look set to create some volatility in the coming quarters. The growth outlook is clearly uncertain, although Casualty headwinds should now (finally) fade. Overall, it was a mixed conference call with items to be keep both sides of the debates interested, in our view. BNPP Exane View: Insurance revenue guidance for H2 a positive, but consensus still a stretch: Insurance revenue misses / downgrades have been a theme with this set of reporting. Swiss Re was impacted by the same challenge. The company had attributed part of the miss to heightened seasonality, with the change in reserving philosophy the main driver in the change yoy (after normalising for the accounting change and disposals). The company guided to a $1.5bn increase in PandC Revenues in H2 vs H1. This would put the FY 2025 insurance revenues at $19.3bn. Consensus currently sits at $19.5bn. Life and Health Re - Some noise to come: There was some negative experience variance in the Life segment in H1. This was attributed to assumption updates largely on ''smaller portfolios''. The company completed a large reserve and assumption review in LandH Re last year. However, it anticipates some noise as the complete the assumption updates on some smaller portfolios that are developing worse than expectation. In time, management expect that experience variance will trend to zero, however, there may be some noise in the near term before we get there. US Casualty - Finally done: Management stated that Swiss Re had gone from 17% share of the US Casualty market at peak down to 5% currently. There was a suggestion that the...
Swiss Re AG
What happened? Swiss Re has reported its Q2 2025 results. The net income of $1,330m is a solid beat to consensus, with the PandC businesses driving the way. The PandC combined ratio was a large beat, albeit driven by very favourable nat cat and man-made losses and better discounting offsetting a worse attritional loss ratio. The renewals also saw a significant volume decline, with renewal volumes falling 5.9% as the company continues to reduce its casualty book aggressively. Given the reaction to revenue disappoints this results season, we would expect the shares to underperform today. BNPP Exane View: Strong Q2 combined ratio, but worse attritional: Swiss Re delivered a combined ratio in Q2 well ahead of consensus. The Q2 combined ratio was 76.3%. However, the attritional was substantially worse than expectations. The company has had a positive nat cat outcome ($14m release) in Q2, man-made were $73m, the quarterly discount rate was 11% and the company has flagged positive PYD. Note that there has been a $256m benefit from changes in the risk adjustment. This points to a more challenging attritional development. Renewals: The renewals in June and July saw volume fall 5.9%. This was due to a very large decrease in the casualty book at renewal, which fell by -26.6% at renewal season. The net price change of -2.4% is better than we had assumed (BNPPE: -2.9%). Net renewals saw a 3% increase in volume across the year. Insurance revenue: Insurance revenue has been the focus of this results season. Group insurance revenue misses expectations by 1%. PandC Re missed by 6%, CorSo beat expectations nicely and Life was close to in line. The revenue yoy was impacted by the change in the accounting for NDICs (as has peers), however, the decline is still material despite the FX tailwinds. CorSo: CorSo showed continued strong development. The combined ratio beat estimates by 2ppts with insurance revenue also ahead of expectations. Life and Health: Life and...
We have adjusted our estimates ahead of the company''s Q2 earnings report. We update to reflect the benign Natural Catastrophe experience in Q2, the movements in FX and interest rates and the changes in insurance revenue accounting highlighted in Q1. We adjust our target price down to reflect our small earnings downgrades and the further weakening of the USD vs CHF since our last update. We do not consider the changes to be material; our rating is unchanged.
What happened? We had a conversation with Swiss Re ahead of its Q2 results which will be reported on 14 August. We note there was no change to guidance. We summarise the key takeaways below. BNPP Exane View: . Renewals: Swiss Re reminded us that risk-adjusted pricing was down 1.5% at 1.1 and 2.3% at 1.4. The company highlighted that broker reports suggested that pricing trends were similar at 1.6/1.7. However, the mix of business at 1.6 / 1.7 looks more like 1.4 than 1.1. There are more loss affected accounts renewing at 1.6/1.7, which should help. However, similar trends to recent renewals is a reasonable assumption. . New Business CSM: Note, that the new business CSM will only include the 1.6 renewal. 1.6 renewal is c6% of new business, with the 1.7 renewal accounting for 14% of new business. . Catastrophe losses: The recent Aon and Gallagher reports suggest that Q2 has been active in terms of large losses. However, the industry losses have been high frequency, relatively low severity events, predominantly in the US. As such, we expect the catastrophe load in Q2 will be relatively benign. . Man-made: There have been more man-made events, mainly in the Aviation and Marine lines of business. Q1 was also active. As a reminder the average quarterly man-made losses have been c$75m in PandC Re and CorSo. . FX: FX has moved materially in the quarter. As a $ reporter, the company will enjoy a revenue tailwind from USD depreciation. The company has CHF costs, due to holding and head office costs. The company expects the currency result impact to be relatively low. . FWD: There will be no material PandL impact associated with the IPO of FWD. This is accounted for through OCI, as such, there will be no PandL impact. Swiss Re currently owns c5% of FWD.
What happened? Swiss Re CEO Andreas Berger and new CFO Anders Malmstrom hosted a conference call following the Q1 2025 results. Given the confusion on the impact of the significant insurance revenue miss, a lot of the discussion and the questioning focused on the insurance revenue outlook, and the how the accounting change should influence combined ratio expectations. We discuss the moving parts below. Elsewhere, management helpfully highlighted that Life experience, especially in US mortality, had been positive. However, overall, we expect the insurance revenue point, and potential impact on consensus earnings will continue to dominate. BNPP Exane View: The Insurance revenue miss, and what it means: Management outlined that the Insurance Revenue miss in PandC Re in Q1 was driven by a change in the accounting framework. This resulted in a removal of the recognition of revenues which had commission elements and a similar reduction in the commission costs. As such, from a reported earnings basis, it is net neutral. i.e, the insurance revenue lost has a combined ratio of 100%. Therefore, removing this from the expectations will improve the combined ratio reported yoy mechanically. However, management indicated that this change in accounting treatment was already factored into the plan and into the guidance of a better than 85% combined ratio. Consensus currently assumes insurance revenue growth in PandC Re of 5%. This could be more like down 2.5% based on the company guidance of stable insurance revenue in PandC Re for the remainder of the year. Consensus already forecasts a combined ratio of 84.5% for FY25, despite the large loss burden of Q1. This could certainly improve based on the Q1 report and the strength of the underlying numbers. However, whether that is sufficient to offset the changes to the insurance revenue forecast is doubtful. From the CSM angle: The other angle to look at the new business development is the new business CSM. The new...
What happened? Swiss Re has released its Q1 2025 numbers. Net Income is a sizeable beat, although the drivers are lower quality. Q1 benefitted from a one-off tax item and a disposal gain on a minority equity which supported the result. The underwriting margins in both PandC Re and CorSo were better than forecasts. However, topline significantly missed estimates across all three divisions, with one-off cancellations of external retrocession deals driving the miss. Based on the net income in Q1, the company has achieved the run-rate net income guidance, despite elevated nat cat. As such, FY 2025 net income guidance has been confirmed. BNPP Exane View: A beat and a miss: Swiss Re has beaten expectations on net income. On an underlying basis, this is supported by the continued strength on underwriting margins. However, topline missed expectations significantly at a group level, with major headwinds across all three divisions. The better underwriting margins did help to offset this. However, the better than consensus result is therefore driven by the investment gain ($178m) and a lower than forecast tax rate (14%). Strong margins: The continued strength of Swiss Re''s underlying margins is evidenced by the beat in both PandC Re and CorSo on the combined ratio segments. Further strength can be derived from the fact that the PandC Re combined ratio was very close to FY 2025 guidance despite the $207m of excess nat cat (~4.5ppt) and $140m of large man-made claims in the quarter. This again suggests very strong underlying margins at a reinsurance name. Topline developments: The topline developments were far less helpful this quarter. Swiss Re''s Insurance Revenue declined by 11% at a group level, with declines across all three segments. The company is attributing this predominantly to one-off benefits in the prior period and other one-off times such as a non-renewal of a large external retrocession contract. However, there was no assumption of one-off...
Dealing with the headwinds well Swiss Re spent 2024 putting its legacy issues behind it, setting the base for a much stronger earnings outlook. However, 2025 has already bought a number of headwinds, notably the California Wildfires and the weakening of the dollar, especially vs the Swiss Franc, whilst pricing trends are also less supportive. With consensus expectations already factoring in the strong underlying earnings, and some company specific and macro headwinds remaining, we remain Neutral. We lower our target price to CHF 135 (from CHF 144), largely to reflect the FX movements. Renewals and growth - the outlook for 2025 Swiss Re delivered solid growth at the 1.1 renewal, with a small risk adjusted pricing decline. We forecast 1.4 showing a similar trend, albeit with a slightly higher rate of rate declines. 1.6 / 1.7 should be slightly better. We assume risk adjusted pricing down in the 1 - 2% range for the full year. We do note that US peers have been reporting deteriorating pricing, especially in US Primary property. However, we do not see the deterioration as sufficient to change the 2025 outlook. More macro headwinds, but embedded earnings tailwinds At the start of the year, macro movements offered reinsurers a relative tailwind. Higher US rates, USD strength and strong risk asset performance benefitted the reinsurers most in the sector. Since then, things have changed. Dollar weakness vs the strength of the Swiss Franc, in particular, is a challenge for Swiss Re. This is the main reason behind our target price reduction. Valuation limits upside Swiss Re now trades on a c.11x 2026 P/E ratio. If we normalise for our embedded headwinds in the numbers (iptiQ, uncertainty loading), this is still a 10x 2026E multiple. This is not an excessive multiple, however it does not leave much room for re-rating potential, in our view. Neutral.
What happened? Swiss Re management hosted its Q4 2024 results conference call. The call discussed the key takeaways from the results and the 1.1 renewals. Overall, the tone of the call was clearly confident. This confidence encompassed the underwriting turnaround, the underlying earnings power of the group and the guidance for FY 2025. We discuss our key takeaways below. BNPP Exane View: . High confidence on 2025 guidance despite California wildfire losses: A key emphasis of the call was reiterating and reaffirming the confidence in the 2025 guidance. This is despite the California Wildfire losses already consuming 1/3 of the FY 2025 catastrophe budget. Management highlighted the high level of the underlying earnings in FY 2024, the growth at renewals, which it viewed as value enhancing, and the greater confidence in the Life and Health earnings following the assumption updates. These factors should all support confidence in 2025 guidance. . Renewals are net neutral for profitability: Management highlighted that the renewals were net neutral in terms of profitability. Management stated that the net impact of risk adjusted pricing was low (below 1ppt) and this will be offset by discounting tailwinds. Management also emphasised that the claims cost disclosure was based on conservative assumptions and incorporate model updates. Overall, management did not think much was given away on margins at the renewals. . Comfortable on CAT budgets: Swiss Re''s CAT budget for FY 2025 remains at $2bn, in line with 2024 levels. This is despite the growth at renewals, notably in Property risk. It is also despite the $700m of incurred losses from the California Wildfires. However, the catastrophe loss experience in FY 2024 suggests this CAT budget is reasonable. Swiss Re''s loss shares have reduced materially. These lower loss shares reflect the underwriting work the company has done and should give investors confidence on the conservatism of large loss budgets....
What happened? Swiss Re has reported its Q4 2024 results. The company has delivered another strong update, further building credibility and comfort with the company''s underwriting turnaround. The company has beat consensus net income for Q4 by 12%, supported by a very strong performance on large losses, again. The DPS has grown by 8%, slightly ahead of the company''s guidance of 7% DPS growth. The 2025 guidance remains unchanged. The 1.1 renewals provide further comfort in this guidance. The company has reported a 7% growth in premiums at the 1.1 renewals, supported by 2.8% nominal price increases. The company has reported risk adjusted pricing of -1.5%, roughly in line with peers. Post discounting, this is expected to be net neutral on the combined ratio. The losses from the California wildfires are anticipated to be less than $700m. This is slightly below our assumed loss of $800 - 850m and ahead of the Q1 nat cat budget of $400m. BNPP Exane View: This is another solid update from Swiss Re as the company continues to build credibility and confidence in its underwriting strategy and stability of earnings. The low large burdens in Q4 from Hurricane Milton and California Wildfires are once again striking. This highlights the success of the underwriting efforts the company has made in recent years. The ''normalised'' earnings point to a net income of ~ $5bn, if experience variances are set to nil. This suggests significant prudence in the company''s $4.4bn net income guidance for 2025. On the renewals, we welcome Swiss Re''s growth, something which has been somewhat lacking in recent years. The company''s risk adjusted rate increases are consistent with peers. The company remains focused on growing in concentrated areas. The majority of the growth has come in non-Nat Cat exposed Property business, which grew 28% at renewal. Finally, Swiss Re has increased its dividend per share to $7.35, an 8% increase yoy. This may be disappointing to some...
What happened? Swiss Re has released its FY 2025 targets ahead of its ''Management dialogues'' presentation later today. Overall, the targets look in line in or slightly ahead of consensus expectations. We would view this as a positive, especially given the likely conservatism embedded in the targets and the break-down of the profitability target metrics. The conservatism in the PandC Re combined ratio combined ratio guidance stands-out, in this regard. The company has not provided guidance on any headwind from buffer build / timing differences on the release profile, although the guidance of neutral experience variance suggests that the company is anticipating some continued headwind in 2025. We summarise the targets vs our expectations below. Source: Company Data, BNPPE estimates, Visible Alpha, Bloomberg BNPP Exane View: Overall, this is a strong guidance for net profit, in our view. The net income guidance of EUR4.4bn is ahead of our expectation. We assume that there is a high degree of confidence in this number, given Swiss Re''s desire to be viewed as more conservative and cautious on guidance. We think this view is supported by the PandC Re combined ratio guidance. We think this looks highly conservative vs the underlying level of profitability that we estimate of 2024E, which is closer to 82%. There does appear to be a material assumption of headwinds from reserving timing differences. This supports the potential for further increases in guidance for 2026 and beyond. The one negative is in the Life and Health Re guidance. The company is expected to take a ~5% hit to its CSM following the completion of its reserving review. This is unwelcome and results in a Life and Health Re profit guidance behind consensus. We would not read too much to the CSM adjustment or be materially concerned of further adverse effects. The commentary is that Life claims trends, especially in Swiss Re''s largest business segments are satisfactory. Finally, the DPS...
Swiss Re management hosted a conference call that gave little away in terms of the outlook for FY 2025. Management deferred most of the questions about the outlook, and the underlying earnings power of business, to the investor event it will hold on 13 December 2024. However, it was clear that management are confident in the underlying performance of the business. Management were a bit more cautious on the potential for positive US Liability reserve development in time than might have been hoped. However, they did state that there would be no further strengthening in this line of business. We summarise the key takeaways below: . US Liability - no further strengthening: Management were emphatic in stating that there will be no further strengthening on the US Liability reserves. The company stated that they were now at the 90th percentile on reserves, and this was in line with where the company wanted to be. The ''vast majority'' of the reserve strengthening was due to adding IBNR on more recent underwriting years to move to the 90th percentile, rather than observed claims experience. This should put the issue to bed. . US Liability outlook - market remains challenged: Management remain very bearish on the outlook for US Liability lines profitability. The company stated that any business that has exposure to social inflation continues to need a major repricing. It would manage its exposures at the upcoming renewals and seek significant rate increases. However, in the absence of a major repricing and / or legislative reform, the company will remain very cautious in this line. . No comment on the outlook for 2025: Management deferred all questions on the 2025 outlook to the investor day. However, with a solid performance in CorSo, Life and Health guidance likely to be achieved with no real one-offs in 2024 and an underlying combined ratio of ~ 80% in PandC Re, we can see the path to a net income in the high $4bn range. . Don''t want to be ''schizophrenic''...
What happened? - Swiss Re has announced that it is strengthening its US liability reserves by $2.4bn in Q3 2024 - This will result in the company making a group net income of $0.1bn for Q3 2024 - The strengthening was partly offset by releases in other lines. Net reserve strengthening in Q3 was $2.0bn - The group now sees its overall reserves across its PandC businesses to be positioned at the higher end of the best estimate range. There is also the introduction of the uncertainty allowance to include in the reserve picture. As such, there does not appear to be any reason for further reserve strengthening going forward. - Management state that they have addressed ''reserve developments in our entire US liability portfolio, including all prior underwriting years'' - Following these reserving actions, the company expects that the group is positioned at the 90th percentile on its best estimate range across the entirety of the PandC reserves. BNPP Exane View: Outside of reserve strengthening, the Q3 performance appears very strong. The company net income for Q3 was $0.1bn, despite the $2.4bn headwind and the major nat cat events seen in the quarter. The company has also guided that it expects $3bn of net income for the full year. Again, this is down from the $3.6bn original net income target, but still a very good result considering the headwinds from reserve strengthening. Looking forward there will continue to be a) some uncertainty whether this truly draws a line under the US Liability issue and 2) some drag from adding further prudence to new business. On these items, it does seem the best attempt the company has made to fully draw a line under US Liability discussions and the company has also significantly increased prudence across the entire book. On the latter, the $500 - 200m walk from FY24 - FY27 from adding additional prudence on new business should reduce. We expect an update on this at the company Investor Day in December. Given these two...
Higher reinsurance prices, higher interest rates, and kinder accounting all provided tailwinds to the reinsurance sector in ''23 and thus far in ''24. Swiss Re also benefits from these trends, but some uncertainty lingers - particularly around reserving and management change. We explore these two topics and update our full model onto IFRS17. Reserving: has Swiss Re done enough? Predicting the future is hard. And reserving data is complex. Is Swiss Re as cautiously reserved in Liability as Hannover and Munich? Probably not. But did we (or should we) expect that to be the case? No, and not for some years. Our initial analysis of reserves mostly serves to underline the cautious approach of Swiss Re''s German peers. But we see earnings comfortably ahead of target for Swiss Re (which includes a new reserve buffer) and so we think there is likely to be room to both report good numbers and strengthen reserves. Management change: what will the new CEO do differently? Our base case is for minimal change from the internally promoted Andreas Berger, who started in the Group CEO role on 1 July. Reserving will remain very much towards the top of his ''to do'' list we expect, and, more cheerfully, better expected results will require Mr Berger to help steer the company along a ''new'' capital return trajectory. We expect a $0.5bn buyback with FY24 results. Estimate changes, and a valuation change IFRS17 was good in profit terms for insurers vs. reporting under IFSR4 - and the change is even more helpful for Swiss Re moving from US GAAP. This brings the company reporting closer to the economic reality of its performance - the uplift in earnings is not ''just accounting''. Our target price moves as a function of excess capital build (from higher earnings) as well as due to a lower beta from, we expect, a more stable earnings pattern in the coming years.
• The net result swung from a loss of $442m for Q3 22 to a profit of $1.02bn for Q3 23 • The segments participated in the lower claims and higher interest rates • RoI increased from 1.6% for 9M 23 to 3.5% for 9M 23 • Management confirmed the full year profit target of more than $3bn for FY2023
• Net profit rose from weak $157m for H1 22 to $1.45bn for H1 23 • RoI was up to 2.8% for H1 23 compared to 1.2% for H1 22 • P&C achieved successful July renewal • Management confirmed the full year profit target of above $3bn for FY2023
• Net premiums earned rose by 4% to $11.1bn for Q1 23 • RoI improved from 0.7% for Q1 22 to 2.8% for Q1 23 • The net result swung from a loss of $248m for Q1 22 to a profit of $643m for Q1 23 • Treaty premium volumes increased by 5% in the April renewals
• Net profit attributable to shareholders decreased by 67% to $472m for 2022 compared to 2021. EPS was only CHF1.63 for FY2022 compared to CHF4.52 for FY2021 • Management proposes a dividend of CHF6.40 per share for FY2022 after CHF5.90 for FY2021. • Swiss Re renewed $10.2bn in premium volume on 1 January 2023, representing an increase of 13%. • Swiss Re targets net income of more than $3bn for 2023 and RoE of 14% for 2024
• Swiss Re estimates its preliminary claims from Hurricane Ian at approximately $1.3bn in Q3 22 • Expected Group net loss of approximately $0.5bn for Q3 22 • ROE target of 10% for 2022 is unlikely to be reached
• Net profit declined by 85% to $157m for H1 22 but Q2 22 profit was $405m • RoI was down to 1.2% for H1 22 compared to 3.2% for H1 21 due to listed equity losses of $426m • P&C achieved a price increase of 12% in July renewal • Shareholders´ equity declined by 37% in H1 22, mainly due to $7.5bn of unrealised investment losses.
• Net premiums earned rose by 4% to $10.6bn • Impact of the COVID-19 on the underwriting result of the group was $524m for Q1 22 • Net result was a loss of $248m for Q1 22 compared to a profit of $333m for Q1 21 • Treaty premium volumes increased by 15% in the April renewals
• Net result increased from a loss of $878m for 2020 to a profit of $1.44bn for 2021. • Management proposed an unchanged dividend of CHF5.90 per share for FY2021. • Swiss Re renewed $8.9bn in premium volume on 1 January 2022, representing an increase of 6%. • Swiss Re announced a new group RoE target of 10% for 2022 and 14% for 2024
• Net premiums earned rose by 6% for 9M 21. • Net result was a profit of $1.26bn for 9M 21 compared to a loss of $691m for 9M 20. • COVID-19-related claims and reserves declined from $3.0bn for 9M 20 to $1.27bn for 9M 21. • Net income of $212m for Q3 21 was above consensus expectations of a loss of $81m.
• Net result was a profit of $1.05bn for H1 21 compared to a loss of $1.13bn for H1 20. • Impact of the COVID-19 crisis on the underwriting result of the group was $870m for H1 21 compared to $2.5bn for H1 20. • Treaty premium remained largely stable but the price improved by a nominal 4% in the July renewals. • Shareholders´ equity declined by 12% in H1 21, mainly due to $2.5bn unrealised investment losses.
• Net premiums earned rose by 7% to $10.2bn • Impact of the COVID-19 crisis on the underwriting result of the group was $643m for Q1 21. • Net result was a profit of $333m for Q1 21 compared to a loss of $225m for Q1 20 • Treaty premium volumes increased by 20% in the April renewals
Net loss was $878m for 2020 and higher than consensus expectations. Management proposed an unchanged dividend of CHF5.90 per share for FY2020. Swiss Re renewed $7.8bn in premium volume on 1 January 2021, representing a decrease of 11%.
• Net premiums earned rose by 6% for 9M 20. • Net result attributable to shareholders was a loss of $691m for 9M 20 compared to net income of $1.34bn for 9M 19. • COVID-19-related claims and reserves rose from $2.5bn for H1 20 to $3.0bn for 9M 20. • Net income of $444m for Q3 20 was above consensus expectations of $248m.
