Investing.com — Swiss Re (SIX:SRENH) on Thursday reported a net income of $102 million for the third quarter, aligning with its pre-announcement.
This brings the year-to-date return on equity to 13.4%. However, results across key business segments reflected a mixed performance when compared to consensus expectations.
Group insurance revenue came in at $11.2 billion, falling 4% short of the $11.7 billion consensus. In contrast, the investment side provided a bright spot, with a group investment result of $1.23 billion, outperforming market estimates by 16%.
The return on investment of 3.9% met expectations, showing stability in core asset returns.
In the reinsurance segment, Property & Casualty faced headwinds. The combined ratio surged to 108.3%, a sharp deterioration from the expected 87.6%, largely due to adverse loss developments.
On the Life & Health side, net income was $321 million, missing consensus by 18%.
This shortfall included a one-off pre-tax adjustment of $81 million, a drag expected to ease by next year.
Corporate Solutions showed more resilience. Its combined ratio improved marginally to 90.8%, better than the anticipated 91.4%.
The group's solvency remained solid, with a 1 July SST ratio of 284%. The shift in methodology, aimed at reducing interest rate sensitivity, pushed the ratio above the target range of 200-250%.
Swiss Re projects full-year net income of at least $3 billion, falling short of the $3.7 billion consensus. Challenges in the P&C Re business are expected to persist, with the combined ratio now likely to exceed the target of 87%.
The year-to-date figure of 92.8% underscores the uphill battle in returning to profitability in this segment. Meanwhile, L&H Re net income is forecasted to reach about $1.5 billion, below the $1.7 billion consensus, despite a strong start to the year.
Corporate Solutions anticipates its combined ratio will rise to below 93% next year, a decline from the previous consensus of 90.3%. While still within acceptable margins, the shift signals potential pressures ahead.
Hurricane Milton is expected to have a manageable financial impact, with losses projected to stay under $300 million in the fourth quarter.
The Life & Health new business contractual service margin reached $894 million for the first nine months, tracking within the annual guidance range of $1.2-1.4 billion.
This growth was led by U.S. mortality business, though partially offset by a new retrocession agreement, which shaved $100 million off the total.
The group’s recurring income yield held steady at 4.1%, while reinvestment yields slipped slightly to 4.6% from 4.8% at the half-year mark, reflecting ongoing adjustments in the interest rate environment.
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