A few days ago, the reinsurer Swiss Re made headlines with a profit warning. The reason was an increase in reserves for past-year claims in the U.S. liability business by $2,4 billion. This reserve increase is now reflected in the results for the first nine months of 2024, which the reinsurer presented on Thursday.

Overall, the company achieved a profit of $2,2 billion from January to September. Thus, the profit in the third quarter amounted to only $100 million, mainly due to the aforementioned provisions. The return on investments for the first nine months of 2024 was 3,9 percent.

Increase in Reserves Strains P&C Re

The total increase in reserves in the first nine months of the year amounted to $3,1 billion. These increases were partially offset by releases in other segments, resulting in a net reserve increase for past-year claims of $2 billion in the third quarter.

The Property & Casualty Reinsurance (P&C Re) division recorded a profit of $603 million, down from $989 million in the first half of the year. However, insurance revenue increased from $9,8 billion in the first half to $15 billion for the first nine months.

More Major Losses in the Third Quarter

Major losses from natural catastrophes cost $813 million in the first nine months. After an unusually calm first half, the third quarter had a negative impact, with $743 million in losses. Swiss Re mentioned the severe hailstorm in Calgary, Canada, Storm Boris in Europe, and Hurricanes Debby and Helene.

P&C Re achieved an underwriting result of $1 billion (first half: $1,4 billion) and a combined ratio of 92,8 percent (84,5 percent). The strengthening of reserves in the third quarter led to a net increase in the combined ratio by 13,3 percentage points for the first nine months, Swiss Re explained. As a result, P&C Re is unlikely to meet its target combined ratio of less than 87 percent in 2024.

L&H Re Division on Track

The Life & Health Reinsurance (L&H Re) division performed better, with a profit of $1,2 billion. Swiss Re cited strong investment returns and solid margins in the in-force business as reasons. Mortality rates in the U.S. remained slightly lower than expected in the first nine months of 2024, although this was offset by «adverse developments in the EMEA region.»

L&H Re recorded insurance revenue of $12,6 billion and an underwriting result of $1.2 billion. The company continues to aim for a full-year profit of around $1,5 billion.

Swiss Re also reported that the withdrawal from the digital insurance platform iptiQ, announced in May, is proceeding as planned. The loss from iptiQ amounted to $241 million in the first nine months. In early November, it was announced that Allianz Direct would acquire iptiQ’s European P&C business, including over 100 employees, which was also noted by finews.com.

Group Profit Expected to Exceed $3 Billion

Looking ahead, Swiss Re reiterated its revised profit forecast from early November. Assuming normal loss activity for the remainder of the year, the group profit is expected to exceed $3 billion. Regarding Hurricane Milton, Swiss Re anticipates losses of under $300 million, which will impact the group’s results in the fourth quarter of 2024.

Andreas Berger, Group CEO of Swiss Re, commented: «The substantial strengthening of reserves in the third quarter provides a solid foundation for success in the coming years. The group's capital position remains strong, placing us favorably for upcoming renewals. We expect to update the market on new targets for 2025 next month.»