SWISS RE LTD

Recommendation history

• —HoldSwiss Re delivered a solid H1 2021: $1.0bn profit, P&C Reinsurance net premiums earned up 8.9% with a 94.4% combined ratio, and Corporate Solutions achieved a 92.7% ratio. The recovery is credible, but $810m of the $870m COVID-19 loss came from U.S. excess mortality in Life & Health Re, while falling investment yields and continued iptiQ losses temper the upside.
• —HoldSwiss Re is a hold after a $1.1bn first-half loss: the underlying business generated $865m of net income excluding COVID-19 claims, while the SST ratio recovered above the 220% target. Pricing and growth are encouraging—P&C Re premiums earned rose 10% and L&H Re 6%—but most COVID-19 losses remain IBNR, keeping reserve uncertainty and further earnings volatility material.
• —HoldHOLD: Swiss Re offers attractive capital returns—a CHF5.9 dividend per share, up 5%, plus a proposed CHF1bn buyback—but the underwriting recovery is not yet proven. P&C Re targets a 97% combined ratio in 2020, while Corporate Solutions is still expected to run at around 105% before reaching its 98% target in 2021; deteriorating US Casualty trends and elevated catastrophe losses remain the key tension.
• —HoldHold: Swiss Re offers improving underwriting momentum and substantial capital returns, but FY2018 exposed material catastrophe and reserve volatility. P&C Reinsurance is targeting a 98% 2019 combined ratio after 19% renewal volume growth and 1% price-quality improvement, while the proposed CHF5.60 dividend and up to CHF2bn buyback provide support; however, Corporate Solutions remains disappointing and the second buyback tranche is conditional on excess-capital generation.
• —HoldSwiss Re remains strongly capitalised: the comparable Solvency II ratio was 312%, roughly 90 percentage points above the 2016 SST ratio, implying an SST ratio of about 222%. However, the uplift is largely methodological—42 points from VaR versus tail VaR, 38 from run-off capital-cost treatment and 37 from deferred taxes—rather than an improvement in underlying economics; this presentation alone supports a hold, not a fresh buy.
• —HoldSwiss Re's reserving update is reassuring but not a fresh buy signal: prior-year reserve releases were almost USD 840m in 2014, while booked reserves remained around the 60th–80th percentile of reasonable best estimates. The main tension is that future releases are expected to be lower, and uncertainty remains in asbestos, European motor claims and inflation-linked lifetime annuities.
• —HoldSwiss Re is a hold after a USD 878 million FY2020 net loss, driven by USD 3.9 billion of COVID-19 pre-tax losses and USD 2.1 billion of catastrophe and man-made claims. The underlying franchise was materially stronger—P&C Re delivered a 97% normalized combined ratio and 13.2% ex-COVID ROE, while Corporate Solutions reached 97%—but the investment case still depends on reserve development and the durability of improving pricing rather than reported earnings momentum.