Swiss Re investment in Corporate Solutions paying off as volumes surge

Swiss Re’s decision to invest in its Corporate Solutions business and build a dedicated on-the-ground presence in key worldwide markets to take primary lead positions is paying off, according to the reinsurer. Some in the market have questioned Swiss Re’s decision to invest in a network, while other big reinsurers – Munich Re, SCOR and Hannover Re – are happy to use their existing ‘office-lite’ reinsurance model to build their primary corporate businesses. But the Swiss group said during its recent half-year results report that its decision to invest in the network – the most recent being a new Hamburg, Germany office – is paying off. An impressive growth in gross written premium at Corporate Solutions certainly seems to support Swiss Re’s strategy. The group explained that gross premiums written generated by the corporate business increased by 18.5% to reach $2bn in H1-2018. Swiss Re stated that this was “mainly driven by growth in the primary lead business, gradually realising the benefit from the strategic investment”. Corporate Solutions generated a net profit of $58m in the first six months of 2018 on the back of this $2bn in gross written premiums. “The result benefited from lower large natural catastrophe losses and an improved prior-year result, partially offset by higher large man-made losses,” said Swiss Re. The profit was not helped by the continued negative impact of prior year business. “The performance continues to be heavily influenced by business written in previous underwriting years and last year in particular, leading to a combined ratio of 101.7% for the first six months of 2018,” explained Swiss Re. The result was helped by the gradually improving market environment, but conditions remain “challenging”, it added. “Rates, as well as terms and conditions, improved after last year’s natural catastrophe events, with high single-digit price increases in loss-affected accounts, but the rate environment remains challenging,” the firm reported. Swiss Re said Corporate Solutions continued to invest in its primary lead capabilities during the first half of 2018. “Through its proprietary technology platform, the business unit currently offers domestic insurance coverage to companies headquartered in 18 countries and, in nine out of these 18 countries, Corporate Solutions can also offer international insurance programme coverage. Overall, the Corporate Solutions’ global network structure extends to over 80 countries,” explained the reinsurer. “The business unit continued to expand its footprint by opening an office in Hamburg, Germany, focusing on servicing large and upper-mid-sized companies. Corporate Solutions also enhanced its presence in Mexico – where it has operated since 2014 – by obtaining a licence to provide direct insurance through a newly established local subsidiary,” it added. Swiss Re reported group net profit of $1bn for the first six months of 2018. The reinsurer said it benefited from “moderate” large loss experience and improved underwriting profitability. Gross premiums written increased 8% to $19.6bn, mainly driven by premium growth across the group’s life and health businesses. Group CEO Christian Mumenthaler said: “It is positive to see that the market environment is gradually recovering. We improved our profitability and underwriting performance, especially in P&C, and our solid results show the value of our diversified book of business. I’m also pleased that we were able to grow as a group overall.”

Swiss Re investment in Corporate Solutions paying off as volumes surge

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