Swiss Re reported a group net loss of $248 million during the first quarter, as a result of headwinds such as the war in Ukraine, higher-than-expected natural catastrophes and the ongoing COVID-19 pandemic.

This loss compares with net income of US$333 million in Q1 2021.

Swiss Re booked reserves of $283 million in the first quarter related to the war in Ukraine, according to Chief Financial Officer John Dacey who described the quarter as “challenging” with “several headwinds.”

“There’s a very high degree of uncertainty with regards to potential impacts on insurers and reinsurers from this war and the related events. And so far, we have hardly seen any actual claims,” said Dacey during a media call to discuss the Q1 results.

Discussing the potential for Ukraine war claims, Dacey said: “We continue to believe … that the ultimate market loss for the industry could be similar in dimension to a midsize natural catastrophe event,” or around $15 billion.

The relevant lines of business to which Swiss Re is exposed in the Ukraine war include: aviation, credit and surety, marine, political risk and political violence, he added.

Dacey said the group also paid higher-than-expected large natural catastrophe claims of $524 million across its P/C businesses – Property & Casualty Reinsurance and Corporate Solutions – as well as COVID-19 claims of $501 million in its Life & Health Reinsurance business.

Some Good News

Despite these Ukraine reserves and large natural catastrophe claims, Dacey said, the group’s property/casualty businesses continued to deliver robust technical underwriting results, while achieving attractive growth in renewals, year to date.

Swiss Re’s P&C Re business reported a Q1 combined ratio of 99.3%, compared to the 96.6% reported for the same period last year. At the same time, Corporate Solutions, its commercial insurance arm, had a Q1 combined ratio of 95.2, an improvement over the 96% reported in Q1 2021. (A combined ratio below 100% indicates an underwriting profit).

P&C Re renewed contracts with US$2.4 billion in treaty premium volumes at the April 1 renewals, which represents a 15% volume increase compared with the business that was up for renewal (through a combination of new business growth and price increases). Since the start of the year, P&C Re has achieved treaty premium volume growth of 8% and a price increase of 3%, which covers more conservative loss assumptions.

Other Q1 results include:

• The group’s net premiums earned in Q1 were $10.6 billion, compared with $10.2 billion in Q1 2021.
• P&C Re reported net income of $85 million for the first quarter, compared with net income of $481 million for Q1 2021. Net premiums earned were $5.3 billion, compared with $5.0 billion in Q1 2021.
• P&C Re had elevated, large natural catastrophe losses of $449 million ($316 in Q1 2021), mainly related to European storms in February and flooding in Australia in February and March. The P&C Re business booked reserves of $154 million for the Ukraine war.
• P&C Re remains focused on achieving a combined ratio target of less than 94% for the full year.
• Corporate Solutions reported net income $81 million, compared with $96 million in the same period last year. Net premiums earned rose 14.3% from Q1 2021 to $1.4 billion, “which was driven by the continuous earn-through of previously realized rate increases and new business growth in focus portfolios,” Swiss Re said.
• Corporate Solutions continues to target a full-year combined ratio of 95%, “as it continues to focus on disciplined underwriting and strict expense management,” the company said.
• Overall COVID-19 claims of $501 million were at the higher end of expectations, said Dacey, noting this was primarily driven by high excess mortality in the United States during the first two months of the year, while other key markets recorded only moderate impacts.

Photograph: A Ukrainian serviceman walks amid the rubble of a building heavily damaged by multiple Russian bombardments near a frontline in Kharkiv, Ukraine, on Monday, April 25, 2022. Photo credit: AP Photo/Felipe Dana.