Swiss Re Posts Hurricane Ian Losses, Anticipates Renewal Price Hikes

Swiss Re posts losses due to Hurricane Ian and indicates price increases for 2023.

Source: Bloomberg | Published on October 28, 2022

Swiss Re profits

Swiss Re reported a $442 million third-quarter loss, primarily due to claims related to hurricane Ian damage, and indicated that renewal prices would rise next year.

The Zurich-based reinsurer’s key unit reported $2.5 billion in claims related to large disasters, including the storm that hit Florida last month, in a statement issued on Friday. Over the last year, it has set aside an additional $700 million in reserves to cover the impact of inflation.

Hurricane Ian reserves are sufficient to cover any new claims that arise in the fourth quarter, according to Chief Financial Officer John Dacey during a conference call with journalists. There have been no reports of major natural disaster losses in the first month of the fourth quarter, he said.

Swiss Re had previously stated that it expected a net loss in the third quarter and would be unlikely to meet its target of 10% return on equity this year. Climate change is at the top of the list of concerns for the insurance industry, according to a survey released this month by French insurer Axa, as rising global temperatures exacerbate physical disasters ranging from wildfires to flooding.

Price Increase

“It’s clear that some people have seen the last five years and have decided they’re not going to provide capital for these risks,” Dacey told Bloomberg Television’s Francine Lacqua. “Swiss Re remains committed to providing capacity, but at a price level and in structures that we believe are fair to all people, not just our primary clients but also our shareholders.” However, we anticipate a significant increase in renewal prices on January 1.”

The reinsurer reiterated its mid-term outlook guidance and confirmed its 2024 profitability targets. Net premiums earned and fee income totaled $32.4 billion in the first nine months of the year, a 1.3% increase over the same period last year.

For the first nine months of the year, the company’s main property and casualty unit reported a net loss of $283 million. Natural disaster claims included Hurricane Ian, floods in Australia and South Africa, and hailstorms in France. The company is unlikely to meet its normalized combined ratio target of less than 94% by 2022. The ratio was 106.1% in the first nine months, but it was 96.2% when normalized.

Ian was struck. One of the most powerful hurricanes to ever hit the United States made landfall in Florida. It wreaked havoc across southern Florida, destroying bridges, flooding roads, and destroying homes. The industry’s insured losses have been estimated at more than $60 billion.