Swiss Re will boost capacity for US nat cat risks if rates rise

Swiss Re said it is “willing to put capacity to work” and increase its exposure to US catastrophe risks if rates improve as anticipated, following the large losses incurred during this year’s hurricane season.

Speaking to journalists after Swiss Re reported losses of $468m for the first nine months of this year, including a $762m loss at its Corporate Solutions business, the firm’s chief financial officer David Cole said: “We have maintained a strict underwriting discipline and have reduced our overall exposure to North American windstorm peril. Depending on how prices develop, we would indeed increase our exposure once again. We also anticipate an increase in demand as well as in pricing.”

Mr Cole said rate increases are expected across most lines of business. “It is too early to have more specific indications for January renewals, but what we see happening right now on large commercial is that the market is responding to catastrophe events and the type of large losses, and we expect this to continue.”

Speaking to Reuters, Mr Cole said rate increases for programmes affected by natural catastrophe losses could be as high as 50%.

Asked specifically about July 2018 renewals, Mr Cole said: “If the pricing available to us meets our expectations, we would be willing to put our capacity to work.”

On reporting its nine-month results, Swiss Re said it expects $3.6bn in claims from Hurricanes Harvey, Irma and Maria, and earthquakes in Mexico. Swiss Re’s Corporate Solutions business received a $1bn capital injection after reporting losses of $762m for the first nine months of 2017.

“With Corporate Solutions, Swiss Re has built a unique platform to access the large pool of commercial risks. The business unit is expected to benefit from pricing improvements following the recent natural catastrophe events,” Swiss Re said.

Speaking to journalists about reserve releases, Mr Cole said: “Corporate Solutions has some negative prior year development that reflects the nature of the business we write, so it is not an assessment of the quality of our reserving, but reflects that claims come into Corporate Solutions somewhat late. But it is in line with our earlier communications.”