Swiss Re targets ROE of 14% for 2024

At its Investors’ Day, Swiss Re reiterated its target to increase the Group’s return on equity to 14% in 2024.

Swiss Re’s Group Chief Executive Officer Christian Mumenthaler said: “We have come a long way since our last Investors’ Day. We successfully completed the turnaround of Corporate Solutions and significantly improved P&C Re margins.

“Despite the COVID-19 pandemic, the underlying L&H Re business continues to perform strongly. In addition, we are developing iptiQ into a leading white-label digital insurer.

”Our strategy to provide more than just risk transfer to our clients is working, and we see attractive opportunities to deploy shareholders’ capital.

“At the same time, we will maintain our strict cost discipline, which has allowed us to keep costs broadly stable over the past ten years, while growing revenues by 6% per annum.”

Continued expansion of nat cat business

Reinsurance will remain at the core of Swiss Re’s strategy going forward, he noted. With its capital strength, diversification and alternative capital capabilities, the Business Unit possesses key strategic assets to effectively compete in the core risk transfer market and the more sophisticated arena of large transactions.

At the same time, its global scale, industry-leading risk knowledge and well-established client network allow Reinsurance to increasingly provide solutions that go beyond traditional risk transfer into areas such as exposure monitoring, underwriting analytics and telematics.

The focus on underwriting excellence and disciplined growth remains a top priority for P&C Re.

This includes the continued expansion of the natural catastrophe business, which reported an average combined ratio of 75% over the past ten years and attracted rising interest from third-party capital partners.

Following the completion of its turnaround, Corporate Solutions’ strategy is centred on increasing earnings resilience and diversification. It will continue to focus only on markets where it has a competitive advantage, combined with the continued build-up of the Business Unit’s international programme and risk solutions capabilites.

Strong capital position

Swiss Re has maintained a very strong capital position throughout the past years – comfortably within or above the 200–250% Group Swiss Solvency Test (SST) target range, despite above-average natural catastrophe claims and the COVID-19 pandemic.

The Group’s capital management priorities remain unchanged, focusing on ensuring superior capitalisation, increasing the ordinary dividend in line with long-term earnings and deploying capital to profitable growth opportunities.

The Group is continuing to prepare its transition to IFRS for its consolidated financial statements as of 1 January 2024. Current modelling indicates that the transition from US GAAP to IFRS will lead to an acceleration of earnings recognition for the L&H Re business, better reflecting the underlying economics.

As a result, the Group’s annual earnings and ROE are expected to increase following the introduction of the new reporting framework relative to the current US GAAP framework.