Swiss Re announces successful completion of ReAssure sale; maintains very strong capital position despite significant addition to COVID-19 loss reserves

Swiss Re announced today the completion of the sale of its subsidiary ReAssure Group plc to Phoenix Group Holdings plc following the receipt of all required regulatory and antitrust approvals. The sale has bolstered Swiss Re’s capital position, which remains very strong despite significant claims and reserves related to the COVID-19 crisis, totalling USD 2.5 billion before tax in the first half of 2020.

Swiss Re maintains its industry-leading capital position, with the Group SST ratio above the target level of 220% as of 1 July 2020, including the impact from the sale of ReAssure and COVID-19 losses. As part of the sale, Swiss Re received a cash payment of GBP 1.2 billion and shares in Phoenix representing a 13.3% stake. Christopher Minter, Head of Principal Investments and Acquisitions at Swiss Re, will join the Board of Phoenix.

Swiss Re’s Group Chief Financial Officer John Dacey said: “Our capital position remains industry-leading. The underlying performance of all our businesses is strong, and they continue to deliver on their strategic objectives, such as the completion of the ReAssure sale. Our teams have conducted a thorough and prudent analysis of all potential exposures related to COVID-19. Based on our current information and related assessments, and noting the unusually high level of uncertainty related to these insured losses, we expect the claims and reserves we have booked the first half of 2020 to cover the majority of our ultimate COVID-19 losses.“

The Group already booked USD 476 million of losses related to COVID-19, mainly for event cancellations, in the first quarter. Approximately USD 1.5 billion of the first-half losses impact Property & Casualty Reinsurance and approximately USD 0.5 billion impact Corporate Solutions. The vast majority of these losses are classified as incurred but not reported (IBNR) reserves and are driven by estimates for affirmative property non-damage business interruption and event cancellation losses. Life & Health Reinsurance is impacted by approximately USD 0.5 billion, mainly as a result of higher mortality claims (reported and IBNR) in the US and the UK versus expected levels.

A range of factors relating to the pandemic, including future infection and mortality rates; the duration and effects of mitigation measures, including on business activity; the timing of an effective vaccine and/or alternative treatment solutions; legislative or regulatory efforts and the outcome of court and arbitration cases on coverage issues; the impact of government stimulus packages; and the severity and duration of recessionary impacts, may impact claims development in the coming quarters, either positively or negatively, relative to Swiss Re’s projections.    

The Group expects to report a US GAAP net loss for the first half of 2020 of approximately USD 1.1 billion. Group net income, excluding the impact of COVID-19 losses, is expected to be approximately USD 0.9 billion in the first half of 2020, reflecting a strong underlying performance across all businesses. Full first-half 2020 results will be published, as scheduled, on 31 July 2020.

Swiss Re

The Swiss Re Group is one of the world’s leading providers of reinsurance, insurance and other forms of insurance-based risk transfer, working to make the world more resilient. It anticipates and manages risk – from natural catastrophes to climate change, from ageing populations to cyber crime. The aim of the Swiss Re Group is to enable society to thrive and progress, creating new opportunities and solutions for its clients. Headquartered in Zurich, Switzerland, where it was founded in 1863, the Swiss Re Group operates through a network of around 80 offices globally. It is organised into three Business Units, each with a distinct strategy and set of objectives contributing to the Group’s overall mission.

Source: Press Release