Swiss Re CorSo to expand in hard market

Swiss Re Corporate Solutions (CorSo) has set out its growth ambitions in the hard market, which the corporate insurer expects will last into 2022. However, CorSo’s chief executive officer Andreas Berger said it will not pursue “growth for growth’s sake”. Following large losses in 2019, Swiss Re took action to return its CorSo business to profitability, which caused the insurer to shrink its book and curtail or exit unprofitable lines of business. Following a two-and-a-half-year turnaround, the unit produced a combined ratio of 91.1% for the first nine months of 2021, despite almost $500m in natural catastrophe and large losses. Swiss Re CorSo is on course to achieve its 97% combined ratio target by the end of the year and become a “profit engine” for the Swiss Re group, according to Berger. Having returned to profitability, the “next phase” aims to make Swiss Re CorSo more sustainable and resilient through future market cycles. If insurers are unable to make an adequate return, it would mark the end of the corporate insurance market, warned Berger. According to Berger, Swiss Re CorSo is now in a “healthy” place and will not pursue “growth for growth’s sake”. The business recognised the need to “invest for the future” but did not want to break its record of beating analysts’ consensus for six consecutive quarters, he said. Swiss Re CorSo will now look to grow geographically and in lines of business that are profitable and that reduce volatility through diversification. In particular, the insurer will look to grow in liability lines, predominantly in Europe and Asia-Pacific, including D&O insurance, accident and health, and casualty insurance. Property catastrophe would remain the “anchor” line of business but are lines of business that Swiss Re Corporate Solutions wants to manage or reduce, he said. The insurer will remain cautious with regards to cyber and US casualty, Berger explained. It has no plans to invest in US casualty due to ongoing concerns about social inflation and is “sceptical about the profitability of US casualty exposures”. Swiss Re is growing its corporate insurance business against the backdrop of a hard market for commercial and specialty insurance. According to Fred Kleiterp, chief executive officer of CorSo in the EMEA region, rates in Europe will remain “firm” for the remainder of this year and for 2022, although “perhaps not at the levels of 2021”. Swiss Re CorSo achieved risk adjusted rate increases of 12% this year, on top of the 15% in 2020. Rate increases will be driven primarily by uncertainty over inflation, Covid-19 business interruption claims and climate change, which have led to “reduced risk appetite from insurers and reinsurers”, he said. Rate increases are a “reality that customers will be faced with” but Swiss Re stands ready to assist corporate clients with captive and parametric solutions, should rates become too expensive, Berger told media at a press briefing. Swiss Re also sees opportunities growing in the market for international insurance programmes, where it now manages some 300 programmes in 17 countries. Swiss Re also offers its in-house international programme management platform PULSE under licence to brokers and insurers, and has agreed a deal for Mitsui Sumitomo Insurance to use the technology from next year. According to Kleiterp, Swiss Re is looking to address “inefficiencies” in the market’s global-programme platforms, which are based on legacy systems with “too many workarounds and mistakes”.

Swiss Re CorSo to expand in hard market

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