Swiss Re said it saw a return on investments (ROI) of 3.4% for 2023, and recurring income yield increased to 3.9% in the fourth quarter, in its ad hoc announcement on 2023 results last week.
The return on equity for 2022 was 2%, highlighting the effect of high interest rates in 2023, which the company said was supporting its profitable investment returns.
“Our businesses are positioned to benefit from the market environment, while the higher interest rate environment supports recurring investment income."
The results for US P&C insurers have been more mixed. A deeper picture of European companies as well as the other reinsurers will become apparent in the coming weeks as full results emerge.
“Our businesses are well positioned to benefit from the current market environment, while the higher interest rate environment supports recurring investment income,” said the company’s Group Chief Financial Officer (CFO) John Dacey in its announcement. “This positive earnings momentum gives us confidence to increase the pay-out to investors."
The company’s press release said they saw substantially higher recurring investment income and strong capital position.
“Swiss Re's ROI for the full year increased materially to 3.4% from 2.0% in 2022,” it said in its results. “The recurring income yield increased to 3.6% for 2023 from 2.6% in the previous year, benefitting from reinvestments in the higher interest rate environment.”
Q4 2023 recurring income yield rose to 3.9%, while the reinvestment yield reached 5.0%.
It said its capital position was strong, supported by earnings and the benefit of higher interest rates. “As a result, the Group Swiss Solvency Test (SST) ratio remained above the 200–250% target range as of 1 January 2024,” it said.
“Strong margins and positive reserve developments in property and speciality lines helped offset reserve strengthening."
It was noted both property and causality (P&C) and life and health (L&H) divisions were aided in healthy results by investments.
L&H Re reported a net income of $976 million for 2023, compared with $416 million in the previous year, and above the targeted net income of $900 million.
“The underlying result benefitted from active in-force portfolio management and a strong investment result, which offset elevated mortality claims in the US,” said the company.
For P&C, a $1.9 billion net income was helped by a “solid investment performance”.
“Strong margins and positive reserve developments in property and speciality lines helped offset reserve strengthening in the casualty business,” it said.
Other sectors – including Corporate Solutions – were also noted for strong investment performance.
In H1 2023, the group's return on investments stood at 2.8%, compared to 1.2% in the first half of 2022. Its ROI was noted to be benefitting from higher income with the recurring income yield increasing to 3.3%, up from 2.6% for the entirety of 2022.
Investments during the second quarter of 2023 contributed to an accretive fixed income reinvestment yield of 4.6%, said the organisation.
For Q3 2023, Swiss Re’s ROI was 3.5%, and its Q3 recurring income yield increased to 3.7%, it said in its statement.
The reinsurer said it increased net income to $3.2 billion in 2023, with a net income of $48 million in Q4 2023 and delivered a return on equity (ROE) of 22.3% for the full year.
Its full Annual Report for 2023 will be released in mid-March.
“We achieved all our financial targets in a year that was characterised by geopolitical turbulence and continued economic uncertainty.”
The results showed a positive H2 for the company as Swiss Re reported a net income of $1.4 billion for the first half of 2023.
The group's return on investments stood at 2.8%, compared to 1.2% in the first half of 2022. The organisation’s return on investment (ROI) continues to benefit from higher income with the recurring income yield increasing to 3.3%, up from 2.6% for the entirety of 2022. Investments during the second quarter of 2023 contributed to an accretive fixed income reinvestment yield of 4.6%, said the organisation.
“We achieved all our financial targets in a year that was characterised by geopolitical turbulence and continued economic uncertainty,” said Group CEO Christian Mumenthaler. “Improved price adequacy in our property and casualty businesses following strong renewals and our underwriting discipline helped us to manage elevated industry losses from natural catastrophes, while L&H Re achieved a solid result, benefitting from active in-force portfolio management and a strong investment performance.”
