Swiss Re reports net income of USD 1.4 billion for 2021 and announces ambitious new financial targets

Swiss Re Ltd / Key word(s): Annual Results Swiss Re reports net income of USD 1.4 billion for 2021 and announces ambitious new financial targets 25-Feb-2022 / 07:01 CET/CEST Release of an ad hoc announcement pursuant to Art. 53 LR The issuer is solely responsible for the content of this announcement.

• Property & Casualty Reinsurance (P&C Re) net income of USD 2.1 billion; combined ratio of 97.1% and normalised1 combined ratio of 94.7%, in line with full-year target
• Life & Health Reinsurance (L&H Re) net loss of USD 523 million; excluding COVID-19 losses, net income of USD 1.1 billion
• Corporate Solutions net income of USD 578 million; combined ratio of 90.6% and normalised combined ratio of 95.0%, surpassing <97% target
• Strong return on investments (ROI) of 3.2%
• Excluding COVID-19 losses, Group net income of USD 3.0 billion and return on equity (ROE) of 11.6%
• P&C Re increased premium volume by 6% in the January 2022 renewals and achieved price increases of 4%
• Very strong capital position with a Group Swiss Solvency Test (SST) ratio around the mid-point of the 200-250% target range as of 1 January 2022
• Board of Directors to propose a stable dividend of CHF 5.90 per share at the Annual General Meeting on 13 April 2022
• Swiss Re targets Group ROE of 10%2 in 2022 and 14% in 2024

Zurich, 25 February 2022 - Swiss Re reported a net income of USD 1.4 billion in 2021 and an ROE of 5.7%, driven by the remarkable performance of its property and casualty businesses. Based on the Group's very strong capital position and positive earnings outlook, the Board of Directors will propose a dividend of CHF 5.90 per share. In addition, Swiss Re announced new ambitious segment targets and aims to increase Group ROE to 10% in 2022 and 14% in 2024.

Swiss Re's Group Chief Executive Officer Christian Mumenthaler said: '2021 marked an important turning point for Swiss Re. Despite still major COVID-19 impacts and a high occurrence of large natural catastrophe events throughout the year, we rebounded to a USD 1.4 billion profit. We have worked hard to strengthen business performance, with a rigorous focus on portfolio quality and underwriting excellence. Our 2021 results are a testament to these efforts, and we are convinced our performance will continue to improve.'

Swiss Re significantly improves profitability despite COVID-19 impacts

Swiss Re reported a net income of USD 1.4 billion and an ROE of 5.7% for 2021, considerably rebounding from a net loss of USD 878 million in 2020. This result was achieved as the Group absorbed large natural catastrophe losses of USD 2.4 billion across its businesses as well as total COVID-19-related claims of USD 2.0 billion. The vast majority of the COVID-19 losses originated in the L&H Re business, while impacts on the property and casualty businesses were minimal. Excluding the impacts of COVID-19, Swiss Re's net income was USD 3.0 billion, which is an increase of 39%.

Swiss Re continued to grow all its businesses, increasing net premiums earned and fee income for the Group by 4.8% compared with the previous year to USD 42.7 billion in 2021.

Return on investments of 3.2% in 2021 was driven by recurring income and significant equity valuation gains. The Group continues to manage its investment portfolio with a focus on the delivery of sustainable income.

Swiss Re maintained its very strong capital position throughout 2021, and its Group SST ratio was around the mid-point of the 200-250% target range as of 1 January 2022.

P&C Re reports strong profit, reflecting improved portfolio quality

In 2021, P&C Re reported a net income of USD 2.1 billion, compared with a net loss of USD 247 million in 2020. The 2021 result reflects the improved quality of the portfolio and rate increases, as well as favourable investment results. P&C Re's net premiums earned grew by 5.3% to USD 21.9 billion, supported by continued price improvements, disciplined underwriting as well as favourable foreign exchange developments.

The business absorbed large natural catastrophe losses of USD 2.1 billion in 2021, mainly relating to Hurricane Ida and the floods in Europe in the third quarter, as well as the US winter storm Uri in the first quarter.

The combined ratio improved markedly to 97.1% for 2021 from 109.0% in 2020. On a normalised basis, P&C Re achieved a combined ratio of 94.7%, in line with its target of less than 95% for the full year.

Successful January P&C Re renewals

P&C Re renewed contracts with USD 8.9 billion in premium volume on 1 January 2022. This represents a 6% volume increase compared with the business that was up for renewal. Strong growth was achieved in property and specialty lines, with natural catastrophe-related premium volume up by 24%. P&C Re achieved a price increase of 4% in this renewal round. This fully offset more conservative loss assumptions, which reflect a prudent view on inflation and other changes in exposure.

L&H Re remains impacted by significant COVID-19 losses, while it continues to improve underlying profitability

L&H Re reported a net loss of USD 523 million for 2021, down from a net income of USD 71 million in 2020, as the business incurred substantially higher COVID-19-related claims of almost USD 2 billion. These losses were primarily driven by the heightened COVID-19-related mortality rates in the US and reflected the spike in infection rates at the beginning of the year as well as during the third and fourth quarters.

Net premiums earned and fee income increased by 7.1% to USD 14.9 billion at improved margins in 2021, primarily driven by large transactions and favourable foreign exchange developments.

Excluding COVID-19 losses, L&H Re improved net income by 26% to USD 1.1 billion in 2021. This reflects the good underwriting performance across all regions, favourable investment results and positive one-off effects from in-force management actions.

Corporate Solutions surpasses 2021 normalised combined ratio target

Corporate Solutions reported a strong net income of USD 578 million in 2021, compared with a net loss of USD 467 million in 2020, as the Business Unit continued to benefit from decisive strategic actions and ongoing price increases. The business successfully absorbed large natural catastrophe losses of USD 345 million, mainly relating to Uri, Hurricane Ida and the tornadoes that affected the central US in early December, as well as large man-made losses of USD 249 million.

Net premiums earned grew by 6.5% to USD 5.3 billion. This was driven by further rate increases in the context of the continued focus on underwriting quality, selective new business growth as well as an improved customer and broker distribution franchise. Favourable foreign exchange developments further helped offset the impact of the previous portfolio pruning actions. Corporate Solutions achieved risk-adjusted price increases of 12%3 for the year.

The Business Unit improved its combined ratio to 90.6% for 2021, compared with 115.5% for 2020. This was the result of disciplined underwriting, strict expense management, continued rate increases and favourable prior-year development. With a normalised combined ratio of 95.0% for the full year, Corporate Solutions surpassed its target of less than 97% in 2021.

iptiQ continues dynamic growth

iptiQ continued to successfully grow its business in 2021, increasing its in-force policies by 144% year on year to more than 1.6 million. Gross premiums written for the core business rose by 95% from the previous year to USD 723 million, with good contributions across all markets and particularly from its property and casualty business in the EMEA region, which was launched in 2020.

Paul Murray appointed CEO Reinsurance Asia and Regional President
Paul Murray has been appointed CEO Reinsurance Asia, Regional President and member of the Group Executive Committee, effective 1 April 2022. He will succeed Russell Higginbotham, who will become the CEO of Reinsurance Solutions. Both will continue to report to Moses Ojeisekhoba, CEO Reinsurance. Paul Murray is currently Head Life & Health Products in Reinsurance, a position he has held since December 2018. Since joining Swiss Re in 2003, he has been in a range of senior leadership roles in Asia and EMEA, as well as various global functions. 

Swiss Re's Group Chief Executive Officer Christian Mumenthaler said: 'We are pleased that Russell Higginbotham has accepted this new important position, driving forward our Reinsurance Solutions strategy. This is a growing part of our Reinsurance franchise that we have been developing over the past years, and we are confident that Russell will take it to the next level. In Paul Murray we have a strong leader with over 25 years of experience in re/insurance. His strong understanding of the Asia market, performance focus, and deep knowledge of Life & Health business, which forms a significant part of our Asia business, makes him the ideal candidate for this role.'

Financial targets and outlook
Supported by the increased underlying earnings power of the business, favourable market outlook and continued cost discipline, Swiss Re published new ambitious financial targets for the Group. Swiss Re targets to increase its US GAAP Group ROE to 10% in 2022 and to 14%4 in 2024, as it focuses on driving profitable growth across all businesses. In addition, Swiss Re maintains its economic net worth per share growth target of 10% per annum.

For 2022, Swiss Re expects the performance of its property and casualty businesses to continue to improve, reaping the benefits of the Group's sustained focus on portfolio quality in combination with increasing prices. P&C Re targets a normalised combined ratio of less than 94% for 2022, while Corporate Solutions aims for a reported combined ratio of less than 95%.

L&H Re continues to offer attractive business development opportunities, although it is likely to remain impacted by the COVID-19 pandemic in 2022. Taking this into account, L&H Re targets a net income of approximately USD 300 million for the year.

Additional information on Swiss Re's Group strategy and the new financial targets will be provided at the Investors' Day on 7 April 2022.

Swiss Re's Group Chief Executive Officer Christian Mumenthaler said: 'With our sharpened Group strategy and clear business development priorities, we will continue the strong trajectory displayed in these full-year results. The new financial targets for the Group and individual businesses reflect the ambition to drive profitability and create value for our shareholders, clients and employees. While we remain in an uncertain environment with regards to the pandemic, we are confident in the Group's ability to deliver against these targets, underpinned by our very strong capital position.'

Additional documentation

For additional information and documentation on Swiss Re's full-year 2021 results, including the Financial Review, the investor and analyst presentation and the accompanying transcript as well as a short video presentation by Swiss Re's Group CFO, John Dacey, please click here.

 

Media conference call

Swiss Re will hold a virtual media conference this morning at 10:30 CET. You can join the media conference via your computer or the Teams mobile app using the following link: Microsoft Teams meeting

Alternatively, you can dial in (audio only) using the below numbers and conference ID:

 

Conference ID: 250 844 521#

 

Switzerland:	[phone]
United Kingdom:	[phone]
United States:	[phone]
Germany:	[phone]
France:	[phone]
Hong Kong:	[phone]

 

For additional local dial-in numbers, please click here.

 

Investor and analyst conference call

Swiss Re will hold an investors' and analysts' conference at 14:00 CET, 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:	[phone]
United Kingdom:	[phone]
United States:	[phone]
Germany:	[phone]
France:	[phone]

 

 Details of 2021 performance

USD millions, unless otherwise stated		20205		2020 Excluding COVID-196		2021		2021 Excluding COVID-196
Consolidated Group (total)	Net premiums earned and fee income		40 770				42 726
	Net income/loss		-878		2 175		1 437			3 023
	Return on equity (%, annualised)		-3.1		7.3		5.7			11.6
	Return on investments (%, annualised)		3.5				3.2
	Recurring income yield (%, annualised)		2.4				2.2
			31.12.20				31.12.21
	Shareholders' equity		27 135				23 568
	Book value per share (USD)		93.90				81.56
			20205		2020 Excluding COVID-196		2021		2021 Excluding COVID-196
P&C Reinsurance	Net premiums earned		20 832				21 926
	Net income/loss		-247		1 257		2 097		2 123
	Combined ratio (%)		109.0		99.8		97.1		96.6
	Return on equity (%, annualised)		-2.8		13.2		22.5		22.7
L&H Reinsurance	Net premiums earned and fee income		13 883				14 868
	Net income/loss		71		855		-523		1 080
	Recurring income yield (%, annualised)		3.0				2.8
	Return on equity (%, annualised)		0.9		10.4		-8.6		15.7
Corporate Solutions	Net premiums earned		5 019				5 343
	Net income/loss		-467		287		578		520
	Combined ratio (%)		115.5		96.4		90.6		92.0
	Return on equity (%, annualised)		-19.7		10.4		22.3		20.3

 

Details of 2021 COVID-19 losses in USD millions

2021	P&C Reinsurance	L&H Reinsurance	Corporate Solutions	Group items	Total
Event cancellation	62		-97		-35
Business interruption	37		23		60
Credit & surety	-5		-20		-25
Mortality		1 945	13	18	1 976
Other lines	12	11	6		29
Total	106	1 956	-75	18	2 005

 

1 Normalised combined ratio assumes average large natural catastrophe loss burden and excludes prior-year reserve development as well as the COVID-19 impact.

2 Group ROE target for 2022 includes current expectations of COVID-19 losses.

3 Risk-adjusted price increases for Corporate Solutions in 2021 exclude elipsLife.

4 As of 2024, Swiss Re Group will report under IFRS. Current modelling indicates that the equivalent IFRS target will be higher than 14%.

5 For Corporate Solutions, 2020 has been revised to include the results of elipsLife, which as of 1 January 2021 is reported as part of Corporate Solutions following the disbandment of the Life Capital Business Unit at the end of 2020.

6 This column is for reference only and excludes the impact of the reserves established for COVID-19-related claims, including estimated tax impacts.

For further information please contact Swiss Re Media Relations: + 41 (0)43 285 7171 or [e-mail].
Please use this link to access the Swiss Re website.

Swiss Re
The Swiss Re Group is one of the world's leading providers of reinsurance, insurance and other forms of insurance-based risk transfer, working to make the world more resilient. It anticipates and manages risk - from natural catastrophes to climate change, from ageing populations to cyber crime. The aim of the Swiss Re Group is to enable society to thrive and progress, creating new opportunities and solutions for its clients. Headquartered in Zurich, Switzerland, where it was founded in 1863, the Swiss Re Group operates through a network of around 80 offices globally.

Cautionary note on forward-looking statements
Certain statements and illustrations contained herein are forward-looking. These statements (including as to plans, objectives, targets, and trends) and illustrations provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to a historical fact or current fact. Further information on forward looking statements can be found in the Legal Notice section of Swiss Re's website.

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End of ad hoc announcement

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Language:	English
Company:	Swiss Re Ltd
	Mythenquai 50/60
	8022 Zurich
	Switzerland
Phone:	[phone]
E-mail:	[e-mail]
Internet:	www.swissre.com
ISIN:	CH0126881561
Valor:	12688156
Listed:	SIX Swiss Exchange
EQS News ID:	1288313

End of Announcement	EQS News Service

1288313  25-Feb-2022 CET/CEST