Insurance Swiss Re reports significant drop in profit in the third quarter

Swiss Re is struggling with a significant decline in profit in the summer quarter due to challenges in the US liability business and natural catastrophes. The reinsurer has adjusted its annual targets.

Swiss Re suffered a significant decline in profit in the summer quarter due to challenges in the US liability business and the impact of natural catastrophes. Profit from July to September amounted to just 102 million dollars, as announced on Thursday. Comparative figures for the previous year were not published due to a change in accounting. Analysts had originally expected a profit of 835 million dollars before a profit warning was issued.

Increased provisions weigh on earnings

In the first nine months of the year, net profit fell to 2.19 billion dollars. This is mainly due to the increase in provisions in the US liability business by 2.4 billion dollars in the third quarter of 2024. These reserves relate to claims from previous years and are not related to the recent hurricanes in the US. Overall, the reserves were increased by 3.1 billion dollars in the first nine months. These increases were partially offset by releases in other areas, resulting in a net increase of 2.0 billion dollars.

Natural catastrophes and their impact

Despite these challenges, the Property and Casualty Reinsurance Division (P&C Re) generated a profit of 603 million dollars in the first nine months. The strong performance in underwriting reinsurance risks more than offset the reserve increases. Losses from natural catastrophes amounted to 813 million dollars, of which 743 million dollars were incurred in the third quarter. The hailstorm in Calgary, the storm "Boris" in Europe and the hurricanes "Debby" and "Helene" were particularly hard hit. For hurricane Milton, which hit Florida in October, Swiss Re expects losses of less than USD 300 million, which will impact the fourth quarter.

Iptiq and the adjustment of annual targets

Swiss Re's insurance sales, after the conversion to the IFRS standard, amounted to 33.71 billion dollars in the first nine months. The planned withdrawal from the Iptiq digital insurance platform is proceeding according to plan, although the loss in the first nine months increased to 241 million dollars due to a goodwill impairment.

With the profit warning, Swiss Re has adjusted its annual targets and now expects a net profit of over 3 billion dollars for 2024, which is 600 million dollars less than previously forecast. The P&C Re division will not achieve the targeted combined ratio of less than 87 percent due to increased reserves. However, the other divisions are on track to achieve their targets. The primary insurance division Corporate Solutions (Corso) should achieve a combined ratio of less than 93 percent, while the life division is aiming for a profit of around 1.5 billion dollars. Swiss Re plans to announce new targets for 2025 in December.

SDA