The 2019 result of Swiss Re, the second-largest reinsurer, didn’t meet analysts’ expectations – despite an increase in profit of 73 percent.
2019 was a tough year for Swiss Re due to a series of natural catastrophes and man-made events. Profit rose to $727 million, up from $421 million a year ago. This was still only about half of what analysts expected it had generated.
The share price of the Swiss-based company dropped about 4.5 percent on the Swiss stock exchange after the publication of the results on Thursday.
Return on Investment
The property and casualty department increased net income to $396 million from $370 million a year ago. It was impaired by natural catastrophe and man-made losses of $2.3 billion.
The large natural catastrophe losses in 2019 were driven mainly by typhoons in Japan, a hurricane in the Atlantic and wildfires in Australia. In addition, man-made losses included the crash of an Ethiopian Airlines aircraft and the subsequent grounding of the Boeing 737 Max fleet.
The growth of the business overall and a strong return on investment helped offset these effects, according to the company. Net premiums rose by a fifth to $19.3 billion.
Problems at Corporate Solutions and Life Capital
The life and health reinsurance business posted an increase in net income of 18 percent to $899 million. Return on equity reached 12.4 percent, above the company’s target range.
But the problems persisted at corporate solutions (with a loss of $647 million) and life capital (minus $177 million).
Higher Dividend and U.S. Management Change
The return on investments increased to 4.7 percent from 2.8 percent in 2019 and helped compensate for these losses. Swiss Re plans to raise its dividend by 5 percent to 5.90 francs per share. The executive board also wants to launch a further share-buyback program of as much as 1 billion francs.
In the U.S., Swiss Re appointed Jonathan Isherwood as its new CEO for reinsurance Americas business. He will replace Eric Smith, who is due to retire. Isherwood was in charge of the team working with global clients of the reinsurance business for the past seven years.
