Swiss Re(US:SSREY)2023-02-17 22:05Financial Data and Key Metrics Changes - 2022 was a challenging year for the company due to various factors including inflation and natural catastrophe losses, but Q4 showed strong performance with a good combined ratio in P&C Re [3][6] - The company reported a recurring investment yield expected to exceed USD 400 million in 2023 compared to 2022 [5] - The dividend was set at USD 6.4, reflecting strong capitalization [5][12] Business Line Data and Key Metrics Changes - Life Re reported approximately USD 200 million in results, with expectations of continued improvement as the pandemic recedes [4] - The combined ratio for Corporate Solutions (CorSo) was 93.1% for both Q4 and the full year [4] - The P&C Re business experienced a net price increase of 5%, with an 18% increase in prices offset by 13% due to inflation and model updates [6][9] Market Data and Key Metrics Changes - The company noted a significant increase in investor interest, leading to an increase in sidecar funds to nearly USD 3 billion [7] - The company expects a combined ratio target of less than 95% for P&C, starting from an impacted level of around 96% due to inflation [9] Company Strategy and Development Direction - The company aims to maintain its multiyear targets, including a group ROE of 14% on a normalized equity basis [7][8] - The company is transitioning to a reported combined ratio target to reflect greater confidence in its delivery and to align with market practices [14][15] - A restructuring initiative is underway to simplify the corporate structure, aiming for increased efficiency and cost savings while maintaining strong underwriting capabilities [61][64] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the renewal data and the overall market conditions, indicating a constructive environment for growth despite ongoing inflationary pressures [5][58] - The company remains vigilant regarding risks, particularly in light of inflation and geopolitical uncertainties [12][51] - Management highlighted the importance of maintaining a stable dividend while evaluating future adjustments based on performance [51] Other Important Information - The company has maintained its NatCat budget at USD 1.9 billion, reflecting a prudent approach despite growth in exposure and inflation [20][24] - The company is closely monitoring the impact of inflation on reserves and expects to maintain strong reserve positions [22][25] Q&A Session Summary Question: Combined ratio target in P&C Re - Management indicated that moving to a reported basis reflects greater confidence and aligns with market practices, allowing for better assessment of volatility [14][15] Question: Economic uplift from January renewals - Management expects similar market conditions to continue throughout the year, with rates needing to match the risks taken [17] Question: NAT cat budget assumptions - The budget remains unchanged due to expected growth in the renewal portfolio, with prudent adjustments made based on loss expectations [20][24] Question: COVID reserves and claims environment - The company has settled some COVID-related claims, reducing IBNRs, and expects to clean up most positions in 2023 [39][75] Question: Pricing environment for CorSo - Management noted that while price increases have slowed, the environment remains constructive for growth, particularly in light of inflation [58][60] Question: Dividend outlook - The company plans to maintain the current dividend level while evaluating future adjustments based on performance [51] Question: Loss model updates - The updates were driven by a combination of inflation and changes in loss models across various lines of business [68][69]