19-05-2025
Swiss Re AG (SSREF) Q1 2025 Earnings Call Highlights: Strong Net Income Amid Large Losses
Net Income: USD1.3 billion in Q1 2025.
Return on Equity: 22% for Q1 2025.
Large Losses: USD900 million in P&C, with LA wildfires contributing around two-thirds.
Insurance Revenue: USD10.4 billion in Q1 2025, down from USD11.7 billion last year.
Life & Health Re Net Income: USD439 million in Q1 2025.
Admin Cost Reduction Target: On track to reduce by at least USD100 million in 2025.
Combined Ratio - P&C Re: 86% in Q1 2025.
Combined Ratio - Corporate Solutions: 88.4% in Q1 2025.
Investment Return on Investment (ROI): 4.4% in Q1 2025.
Tax Rate: 14% in Q1 2025.
SST Ratio: Estimated at 254% for Q1 2025.
Warning! GuruFocus has detected 8 Warning Signs with SSREF.
Release Date: May 16, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Swiss Re AG (SSREF) reported a strong start to 2025 with a net income of USD 1.3 billion and a return on equity of 22%.
All business units contributed positively to the results, supported by strong investment returns.
The company achieved a 6% volume growth in P&C Re, despite a modest net price change of negative 1.5%.
Life & Health Re produced a solid net income of USD 439 million, slightly above the pro rata target.
Swiss Re AG (SSREF) is on track to reduce its cost run rate by at least USD 100 million this year, contributing to a USD 300 million target by 2027.
The P&C Re and Corporate Solutions segments faced significant large losses amounting to USD 900 million, primarily due to the LA wildfires.
Insurance revenue for the group decreased to USD 10.4 billion from USD 11.7 billion in the previous year, partly due to nonrecurring IFRS transition effects.
The P&C Re segment experienced a decline in CSM release, driven by prudent initial loss picks and slightly lower margins.
The macroeconomic environment remains uncertain, with potential risks from increased inflation and ongoing tariff situations.
Corporate Solutions faced higher-than-expected man-made claims totaling USD 150 million in the quarter.
Q: Can you provide insights into the reserve release and whether this reflects a new normal or is it just a response to volatility, such as the LA wildfires? A: Anders Malmstrom, Group CFO: The reserve release indicates resilience in our reserves. While we guide for neutral development, the release shows our reserves' strength. The volatility from events like the LA wildfires is managed, and we expect similar resilience going forward.
Q: The Life & Health Re CSM release was higher than expected. Can you explain the drivers and future expectations? A: Anders Malmstrom, Group CFO: The higher CSM release in Q1 is due to volatility rather than a trend. We maintain guidance of an 8% average CSM release, which should be expected going forward.
Q: How do you view the sustainability of Corporate Solutions' current margin levels amid a softening rate environment? A: Andreas Berger, Chief Executive Director: Pricing levels in property and cat remain healthy, and we expect them to stay competitive. We manage risk profiles case by case, and while some rate reductions may occur, structures remain stable, supporting margin sustainability.
Q: What are your thoughts on the US liability market and actions like Chubb's stance on litigation financing? A: Andreas Berger, Chief Executive Director: We support efforts to address tort system abuses. Constructive actions by companies like Chubb are welcome and could lead to a more insurable and affordable liability market in the US.
Q: With the current economic uncertainty and inflation risks, how are you managing these challenges? A: Andreas Berger, Chief Executive Director: We continuously update our models and scenario planning to reflect changes like tariffs and inflation. While we don't see direct impacts, we remain vigilant and adjust our strategies to maintain resilience.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
