Insurance Swiss Re lowers forecast for annual profit due to provisions

Reinsurer Swiss Re has massively increased its provisions for the US liability business. The annual profit for 2024 will now be significantly lower than previously expected.

Specifically, in the third quarter of 2024, the reinsurer increased its reserves for losses from previous years in the US liability business of the Property & Casualty Reinsurance division (P&C Re) by USD 2.4 billion, as Swiss Re announced on Thursday. This was partially offset by releases in other lines of business. The total increase in reserves this year therefore amounts to USD 3.1 billion.

Due to the increases, Swiss Re must now significantly lower its profit expectations. Swiss Re is still forecasting a small profit of around USD 0.1 billion for the third quarter of 2024 and around USD 2.2 billion for the first nine months of 2024.

"Assuming normal claims experience", an annual profit of more than USD 3 billion is still expected in 2024, according to the statement. Previously, the reinsurer had targeted a consolidated profit of "more than 3.6 billion US dollars".

Apart from the measures announced on Thursday, all business units reported "good results" in underwriting and investments in the third quarter, it added. Accordingly, the L&H Re (life reinsurance) and Corporate Solutions divisions are still on track to achieve their respective 2024 targets of around USD 1.5 billion in profit and a combined ratio of less than 93 percent.

The P&C Re division, on the other hand, will not achieve the targeted combined ratio of less than 87 percent (2024) due to the increased provisions.

Swiss Re will announce the detailed figures for the third quarter next week (November 14). According to pre-market indications, Swiss Re shares are likely to start trading on Thursday with significant discounts.

SDA