Speaking earlier today during Swiss Re’s FY24 earnings call, John Dacey, Group Chief Financial Officer (CFO), stated that following the key January 1st reinsurance renewals, Swiss Re has a lot of appetite for both property and natural catastrophe business.
Swiss Re reported this morning that it generated net income of $3.2 billion in 2024, which is up roughly 3% on 2023’s $3.1 billion, which according to the reinsurer, was driven in part by disciplined underwriting of new business as the firm’s underwriting profit declined by approximately 9% to a still strong $4.3 billion.
In addition, Swiss Re also revealed that it grew its property & casualty (P&C) book by 7% at 1.1, which resulted in premium volume of $13.3 billion, achieving an overall price increase of 2.8%.
During the call, Dacey addressed how much work on reducing casualty or right sizing casualty was completed by the reinsurer at the January renewals.
“We continue to evaluate our casualty portfolio. When we say that we shrunk the premium volume by 1% that actually underestimates the amount of risk reduction that we had. Casualty is one of those places where we achieved some important price improvements year on year, and so for actual premiums to be flat at $5 billion, means that the underlying risk was materially lower.
“I’m not sure we’re disclosing the precise amounts, maybe we can bring more when we do the the summer renewals here, but I think you should assume that we are still uncomfortable with important pockets of casualty, especially related to U.S. liability, but not only.”
He continued: “There are other places where we think the prices are adequate and and that’s one of the reasons why the portfolio is still a big number, typically outside the U.S and at least outside the casualty and commercial motor which have been two problematic areas for us.”
Switching over to property, Dacey said: “The property as you say grew on the January 1 renewals, there’s probably one important client that added to that. But yes, we’ve got a lot of appetite for property and for nat cat, and on nat cat where we saw this special price pressure was on the upper layers of towers which have been very well priced for the last year and a half.”
Interestingly, even at the renewals, Dacey explained how Swiss Re is comfortable that its able to meet its cost of capital. He notes that the reinsurer has capital to deploy, while also noting that assuming the demand is there, the pricing behaviour on both sides of the supply and demand piece is expected to continue to grow.
Furthermore, Andreas Berger, Group Chief Executive Officer (CEO) highlighted one important data point on the casualty side, “The large corporate risk. That’s the very difficult segment in the casualty side. In the U.S. we reduced it by 86% and I think that’s contributing to the reduction in the market share of the U.S. casualty,” he explained.
Dacey added: “And so those reductions of both numbers are from sort of probably 2016-17, I want to say, when our portfolio was probably at its maximum and we started taking severe actions. It was actually Corporate Solutions which did the restructuring, exiting excessive surplus lines casualty in 2019, and reinsurance followed maybe slower than we should have to reduce our strong market share in the late part of the last decade.”
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