Swiss Re Earnings: Continued Sound Underwriting; Fair Value Estimate Maintained, Shares Undervalued

Swiss Re SREN reported a strong set of results for the first nine months of 2023, across all three divisions. Earning net income of USD 2.5 billion for its shareholders for the first nine months of this year leaves the business well on track to meet its full-year target of USD 3 billion. Our full-year target is a pinch over this. So far, Swiss Re has generated a 19.4% return on equity. We maintain our CHF 130 per share fair value estimate and our no-moat rating.

In its property and casualty reinsurance division, Swiss Re has reported net income of USD 1.5 billion. That result has been delivered through a 94.3% combined ratio, a significant improvement from the 106.1% over the same period last year. The results have soaked USD 150 million of additional casualty reserves and reserves for natural catastrophe-related claims of EUR 1.1 billion. Our full-year estimate is for a 93% combined ratio.

Swiss Re’s life and health reinsurance business has earned USD 634 million. This means it is slightly lagging the full-year target of USD 900 million. Our estimates are a smidge higher than this. Nonetheless, it’s still a solid result, in our opinion.

Also, Swiss Re posted another firm result in corporate solutions with net earnings of USD 492 million. A reported combined ratio of 91.3% for the first nine months is roughly in line with our 91.0% full-year forecast. For man-made and natural catastrophe losses, corporate solutions absorbed USD 153 million and USD 83 million, respectively.