• Net Income: USD 3.2 billion for 2024.
• Return on Equity: 15% for 2024.
• P&C Reserves: USD 3.1 billion added throughout 2024, positioned at the 90th percentile of best estimate range.
• Volume Growth: 7% in January renewals, driven by property and specialty lines.
• Combined Ratio (Corporate Solutions): 89.7%, outperforming the target of less than 93%.
• Life & Health Re Net Income: USD 1.5 billion for 2024.
• CSM Balance Reduction (Life & Health Re): 6% reduction due to assumption updates.
• Dividend Increase Proposal: 8% increase proposed for the upcoming AGM.
• 2025 Net Income Target: More than USD 4.4 billion.
• Operating Cost Reduction Target: USD 300 million reduction by 2027, with USD 100 million reduction anticipated in 2025.
• Catastrophe Loss Estimate (LA Wildfires): Less than USD 700 million.
• Return on Investments: Increased from 3.2% in 2023 to 4.0% in 2024.
• Group SST Ratio: 257% as of January 1, 2025.

• Warning! GuruFocus has detected 6 Warning Signs with WBD.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Swiss Re AG (SSREF) reported a net income of USD 3.2 billion for 2024, with a return on equity of 15%, indicating strong financial performance.
• The company achieved a 7% volume growth in new business generation during the January renewals, driven by increases in property and specialty lines.
• Corporate Solutions outperformed its combined ratio target by achieving an 89.7% combined ratio, marking the 18th consecutive quarter of strong performance.
• Life & Health Re met its USD 1.5 billion net income target for 2024, despite challenges, showing resilience in its operations.
• Swiss Re AG (SSREF) proposed an 8% dividend increase, reflecting confidence in its earnings power and commitment to shareholder returns.

Negative Points

• The company faced a significant challenge with the LA wildfires, estimating a loss of less than USD 700 million, which is a substantial portion of the annual catastrophe budget.
• P&C Re missed its target of a combined ratio of less than 87%, reporting a full-year combined ratio of 89.9% due to reserving actions.
• Life & Health Re experienced a 6% reduction in its CSM balance due to assumption updates, indicating potential volatility in future earnings.
• The SST ratio decreased to 257% from 284% midyear, partly due to reserving actions and foreign exchange impacts, which could affect capital strength.
• The company remains cautious about US liability exposure due to ongoing social inflation, which could limit growth opportunities in this segment.

Q & A Highlights

Q: Did the LA wildfires affect your confidence in achieving the 2025 target of $4.4 billion net income? A: John Dacey, Group CFO, stated that despite the LA wildfires accounting for 35% of the full-year catastrophe budget, Swiss Re remains confident in achieving the $4.4 billion target. The event is expected to support pricing in upcoming renewals, and the company maintains discipline in underwriting, focusing on tail risks rather than frequent losses.

Q: Can you provide more details on the negative experience variances in Life & Health Reinsurance during Q4? A: John Dacey explained that the negative experience variances were spread across a dozen geographies, with significant impacts from EMEA health and smaller Asia portfolios. The assumption updates were comprehensive, addressing deviations from expectations, and are expected to enhance the resilience of future results.

Q: How did Swiss Re estimate the California wildfire loss, and what is the split between P&C Re and Corporate Solutions? A: The loss estimate was based on detailed information from primary clients, including direct losses, smoke damage, and auto losses. The estimate includes retro recoveries and reinstatement premiums but excludes potential subrogation. The event primarily impacts P&C Re, with minimal effect on Corporate Solutions.

Q: What are the expectations for capital generation and the SST ratio in 2025? A: John Dacey confirmed that Swiss Re expects positive momentum in the SST ratio, driven by strong business performance and capital generation aligned with the $4.4 billion earnings target. The company anticipates maintaining a robust capital position.

Q: Can you elaborate on the impact of renewals on property and casualty lines? A: Swiss Re achieved strong growth in property lines, driven by a significant client treaty, while maintaining discipline in casualty lines. The company secured double-digit price increases for non-proportional casualty and single-digit increases for proportional casualty, reflecting a cautious approach to risk exposure.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.