Swiss Re issues profit warning as Ian claims bite

Swiss Re has announced that it estimates its preliminary claims from hurricane Ian will be approximately $1.3bn. This will result in an expected group net loss of approximately $500m for the third quarter of 2022.

Swiss Re explained that its P&C Re business’s reported and normalised combined ratios were affected in the third quarter by an increase in small to midsized claims, partly driven by economic inflation.

As a result, the business is unlikely to reach its normalised combined ratio target of less than 94% in 2022.

The group added, however, that its Corporate Solutions operation and L&H Re remain on track to achieve their respective 2022 targets of approximately $300m net profit and a reported combined ratio of less than 95%.

Swiss Re said the 2022 target of 10% group return on equity is now “unlikely to be reached”, given the impact from natural catastrophes, the Ukraine war and financial market volatility. But the group remains confident in the mid-term outlook and committed to its 2024 profitability goals, it added.

Ian was one of the strongest hurricanes ever to make landfall in the US, subjecting the affected region not only to extreme winds but also storm surges and torrential rain. Swiss Re estimates the preliminary total insured market loss from hurricane Ian at $50bn-$65bn, including the National Flood Insurance Programme.

“The foregoing estimates are subject to uncertainty and may need to be subsequently adjusted as the claims notification and assessment process continues,” added the group.

Swiss Re maintains its very strong capital position, with a group SST ratio of 274% as of 1 July 2022. This allows Swiss Re to pursue profitable opportunities in a hardening reinsurance market, while remaining committed to its capital management priorities.

The group’s results for the third quarter will be announced on 28 October 2022.