Swiss Re raises tariffs

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Inflation is not only felt by consumers, it also increases the cost of insurance claims. In addition, the risk of severe weather conditions is increasing worldwide as a result of climate change. To protect the balance sheet from larger and more expensive events in the future, reinsurer Swiss Re is raising tariffs.

Swiss Re has already tightened its price screw this year, as shown in the first quarter report presented on Thursday. Prices were increased by 19 percent in the April renewal round for expired contracts. The increase in the comprehensive January round was already of this magnitude.

No progress in sight

“As of today and looking into 2024, I don’t see any signs of a reversal of a trend towards falling prices in the reinsurance market,” CFO John Dacey said in an interview with AWP news agency. Rather, they are likely to continue to rise, for example, in the next round in June, when contracts in the US state of Florida, which has been badly hit by the storms, must be renewed.

However, according to Dacey, Swiss Re is cautious when reinsurance and renewal, particularly in businesses with hurricane risks in Florida and its US area of ​​responsibility.

Earthquakes cause high costs

In the first quarter of 2023, Swiss Re once again showed how urgent the drastic price adjustments are. The group estimates that major disasters cost just under $600 million, which is a lot compared to other startups. The net figure for the severe earthquake that occurred in Turkey and Syria at the beginning of February alone was announced as 426 million dollars.

Despite this burden, the combined rate in property and casualty reinsurance rose 2.1 percentage points to 97.2 percent in the first three months, and line profit increased to $369 million from just $85 million a year earlier. At the time, high provisions for the Ukrainian war had weighed on the bill.

Survived the pandemic

In life reinsurance, the second largest pillar, it amounted to $174 million after negative $230 million profit from corona costs the previous year. Pandemic costs no longer play almost any role. Corporate Solutions’ primary insurance business also made a larger contribution to profit, with $168 million.

As a result, consolidated profit of minus $248 million was $643 million in the same period last year. Group net premiums rose 4.1 percent to $11.1 billion. At constant exchange rates, growth was up to 7.5 percent.

Good results thanks to capital investments

The good results were also driven by increased earnings in the financial markets. In any case, the group achieved a return on its investments of 2.8 percent, compared to the low 0.7 percent in the first quarter of 2022.

Regarding the banking crisis, Dacey emphasized that Swiss Re does not hold any AT1 bonds from banks on its books. In such bonds issued by Credit Suisse, the holders lose all of their bonds as a result of the urgent takeover by UBS. Otherwise, bank risk is widely supported in the books, according to the chief financial officer. “At the end of the first quarter, we concluded that we do not need to make any value adjustments.” (SDA/dvo)

Source :Blick