The firm believes that Swiss Re was the most affected among European reinsurers by losses from Asia/Japan, which should be a reflection of Swiss Re’s market share and portfolio mix towards the region.
Four out of the five top losses at Swiss Re last year were driven by losses in Japan or Asia, including Typhoon Jebi ($711 million), Typhoon Trami ($$170 million), and the floods ($167 million) and the winter storm ($157 million in Japan).
The only top-five loss to come outside of Asia in 2018 was the California wildfires, which were the largest loss for Swiss Re at around $325 million.
Losses from Asia/Japan alone represent 7.2ppts on the combined ratio, Deutsche Bank noted, which is well below the relative loss from the 2011 earthquake/tsunami but at a similar level when it comes to absolute numbers.
The magnitude of these losses should have translated to the strongest price increases on an individual portfolio level for Swiss Re during the April renewals, analysts said, and with this the highest payback from the 2018 losses.
Deutsche Bank estimated that the April renewals represented around 11% of the portfolio for Swiss Re, and noted that 10% price increases would further cement the 1% price increase seen during the January renewals.
Based on positive spill-over price effects from 2018 into 2019, Deutsche Bank now assumes a positive price effect on the combined ratio of 1.5ppts for 2019.
It concluded that this would lead to an upward parallel shift of its price assumption throughout the following years and would benefit its future estimates as well.