Swiss Re reports $878 million loss driven by the pandemic effect

Swiss Re Group, the reinsurance company, reported a net loss of US $878 million for 2020. The company’s net income rose to $2.2 billion from $727 million in 2019, but that is excluding Covid-19 claims and taxes of $3.9 billion.

Analysts predicted a loss of $456 million for the company. Swiss Re’s Group Chief Executive Officer Christian Mumenthaler said: “The COVID-19 pandemic continues to affect communities and businesses across the globe. The start of vaccination effort brings hope that the situation will improve soon.

Swiss Re Insurance Claims Global Impact of Coronavirus Pandemic

Swiss Re has forecast that the crisis will cost the property and casualty industry anywhere between $50billion and $80 billion claims payments on policies ranging from travel to event cancellation.

“From the start of the pandemic, we took a disciplined and prudent approach to building reserves as actual claims have been slow to come in. While some further COVID-19 losses are expected in 2021, we have dramatically reduced relevant exposures in P&C lines. I am very encouraged by broad-based improvements in portfolio quality and underwriting margins in P&C Re and Corporate Solutions, including in the January renewals.“

Swiss Re says the company is prepared for additional COVID-19-related claims and reserves in its property and casualty businesses of less than $0.5 billion in 2021.

The pandemic has had a huge impact on Swiss Re’s property and casualty insurance division, as claims for business interruption and event cancellation in the second and fourth quarters rose dramatically. That pushed up the division’s combined ratio — a core measure of profitability that calculates claims and costs as a proportion of premium income — to a lossmaking 109 per cent. P&C Re claims and reserves for COVID-19 amounted to $1.9 billion for the year, resulting in a US GAAP net loss of $247 million.

Natural catastrophe losses amounted to  $1.7 billion for 2020. This was largely driven by the Atlantic hurricane season, which included a record 30 named storms and numerous other calamities across the globe. Large man-made losses were dominated by the Beirut port explosion in the third quarter. However, the company added that the claims were dependent on many other factors, and the numbers may go up or decline depending upon the vax effect. Another variable in their 2021 recovery is whether or not the Tokyo Olympics take place. Swiss Re has a $250m exposure to the event but management declined to confirm how much of this figure had been set aside during 2020.

Swiss Re’s Group Chief Financial Officer John Dacey said that the company’s capital position was strong despite the pandemic and other natural calamities that have hit the world. He added that their consistent performance had enabled them to offer a dividend payment of CHF 5.90 per share.

The company has a strong return on investment ratio of 3.6 percent. This was achieved by cutting exposure to sectors vulnerable to the Covid impact, states the company release.

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

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