SSREY (SSREY) Q1 2026 Earnings Report, Transcript and Summary

Ladies and gentlemen, welcome to Swiss Re Q1 Results Conference Call. I am Valentina, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions]The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Elena Logutenkova, Head of Media Relations. Please go ahead.

Thank you, and good morning from my side as well to everyone. I am joined today here by our Group CFO, Anders Malmstrom, and Andres will give you a brief overview of our first quarter 2026 results, and then we'll be very happy to take your questions. Anders, over to you.

Thank you, Elena, and good morning, everyone. Swiss Re delivered a net income of $1.5 billion in the first quarter. All business units posted increased earnings, which were also supported by a low natural catastrophe experience and a strong investment result. Property and Casualty Reinsurance delivered a 43% increase in net income to $754 million and a combined ratio of 79.5% for the first quarter against a target of below 85% for the full year. Large natural catastrophe losses for P&C Re amounted to $133 million, driven by Storm Kristin, which made landfall in Portugal in January. April renewals in P&C Re saw a continuation of the trends we observed in the January renewals broadly in line with what we had expected when we set our targets at the end of 2025. The April renewals are driven by markets in Japan, India and parts of Asia Pacific, representing a modest portion of our overall business at 12%. Our focus on prioritizing portfolio quality over volume remains unchanged as we continue to actively manage the cycle. Competition intensified with different pictures in different lines. We generally defended our market position and importantly, maintained underwriting discipline on terms and conditions. If you take the January and the April renewals together for a more complete picture, overall nominal pricing has been flat in total. We also made some prudent increases to our loss assumptions. And once those are taken into account, the net price change stands at a negative 4.4%. Overall, volume is down slightly with a 2% reduction. We expected a more challenging 2026, and this is clearly what we are seeing in practice as the year plays out. This is simply the nature of our industry, and therefore, you will continue to see us applying discipline and cycle management. Corporate Solutions achieved a 26% increase in net income to $262 million with a combined ratio of 85.1% against a full year target of below 91%. While Corporate Solutions is clearly also having to manage downward price pressure in property, we continue to see underlying growth in our strategic areas of focus, including international programs and alternative risk solutions. Life & Health Reinsurance delivered a 12% increase in net income to $491 million in the first quarter. Following last year's portfolio review, this business is on a stronger footing and has made good progress towards its full year net income target of $1.7 billion. As we announced yesterday, we have strengthened the Life & Health Re team with the hire of Dean Galligan as Head of Transactions, Life & Health Re. This is a new role, which brings together all of our Life & Health transactions expertise and will drive Life & Health Re's transaction-led growth areas, such as our longevity business. Life & Health Re also launched Magnum XP and Promise XP. These are a collection of AI-enhanced tools to support primary insurers with underwriting and claims management. We have already seen this suite of products adopted in all regions, the Americas, EMEA and APAC. The client benefits are clear. These tools speed up the key processes needed to get people into the insurance safety net or make better, more consistent decisions earlier in the claims journey. Turning to the outlook. Our goals are unchanged, deliver on our financial targets and maintain the group's overall resilience. Against the backdrop of geopolitical turbulence, we set aside around $400 million in additional reserves in the first quarter for potential inflationary impacts of the ongoing Middle East conflict. We delivered strong earnings in the first quarter, putting us on a good path towards our 2026 financial targets. With an increasingly challenging market environment, our P&C businesses will continue to focus on disciplined underwriting and cycle management. At the same time, we expect Life & Health Re to make a growing contribution to balance the group's overall performance going forward. With that, I would like to hand back to Elena.

Thank you, Anders. We would be ready to take your questions. Now operator, could you open the line for questions, please?

[Operator Instructions] The first question comes from [ Tyson Dem ] from S&P Global Market Intelligence.

Got a couple if I may. Just one on the Middle East reserve you set aside $400 million. I think I'm right in thinking that's $350 million for P&C Re and $50 million for Corporate Solutions. I just wonder if you could say you mentioned it was to do with inflation or potential effects of inflation. I was just wondering if that's all that the reserve is for if it's for other things or how you're thinking about potential claims from the war? And then the second question really was just around life and health reinsurance. The first quarter performance suggests that you actually beat your $1.7 billion target. So I'm just wondering if there's things that you're expecting later in the year that will sort of bring that down to EUR 1.7 billion at year-end.

Okay. Very good. Thank you for the question. So maybe if we start on the Middle East. before I go into directly answer your question, so overall, we did not have any direct claims coming from the war. So [ Swiss Re ], because we have all the war exclusion. So no direct exposure, but that's really the secondary risk that we see coming from the Middle East. And when you think about all the disruption in the supply chain and then in particular, the higher energy prices, I think that's where we strongly believe that we're going to see inflation picking up over the next time. In certain areas, we've already seen that. And that's why inflation is probably the biggest impact that comes from the Middle East war. And so that's why the $400 million is, as you rightly state, $350 million for P&C Re and $50 million for CorSo. On the Life & Health side, we obviously have a really good result. We're very happy with that. It's a consequence of all the repositioning and the strengthening that we've done. It's also, of course, then supported by positive claims development in the U.S. on U.S. mortality, in particular, we had lower large claims and large claims is subject to volatility. So we can't expect that we see every quarter the same positive large loss on a large impact from large claims. So that's why I think we're well on track to that. But I wouldn't say that this is a trend in mortality. This is just normal volatility that we expect.

The next question comes from Nathalie Olof-Ors from AFP.

I will have 2 questions. One is on France on the floodings. In France, if you've seen an impact or if you could give us an indication of what you've seen with these floodings. And then on the reserves, I think I missed the number. You said $400 million and provided the details for CorSo and P&C. Can you give us an indication as to how the Middle East is going to have an impact? Why do you think it is important to put money aside? And what can the effect be?

Okay. Very good. So on the France flooding, this is probably too early to say what this means a Q2 event to my knowledge. So we don't have data. We don't see right now there's going to be a big reinsurance event. Obviously, always -- first, it goes to the primary insurers and then if it hits the triggers, then it would go back to the reinsurers. So that's too early to know that, but we don't expect that to be a material impact for reinsurance. So back to the Middle East. So the reserve overall for the group that we set up here is about USD 400 million, USD 350 million for P&C Re and $50 million for Corporate Solutions. And as I stated before, when we look at the exposure coming from the Middle East conflict from the war itself, we have war exclusions in our programs, which means the direct exposure is very limited. We do in the specialty lines, sometimes have more inclusions, but that's separate, and we did not have any claims so far that were material note. Now the impact of the war is really the second order impact. When you think about the significant increase in energy prices, that will drive inflation. Also the disruption in supply chain will drive inflation. And so that's why we thought it's prudent to put money aside for higher inflation. This is for business that has already been written because -- not claims that happen, but claims will come, can be property prices, can be construction, can be whatever. And I think that's where we believe that higher inflation will have an impact. And that's the main reason we put that money aside.

You mean that the claims are going to -- that inflation is going to inflate the cost of...

Of the claims.

Claims.

Correct. Yes.

Can you give us a few examples from what I remember, there was -- after the COVID, there was an inflation in the price of auto parts versus the scarcity of parts. Can you remind us what you saw with the COVID and in '22 after the war in Ukraine?

Yes. So I don't have the data in front of me for COVID and for the war. But maybe I just can give a bit -- without going too much into details, I mean, higher energy prices increases the production of products, increases the transport of products and throughout the value chain, you can have an impact that drives prices up. And that's really what we want to reflect here with this additional reserves. We have not allocated it to specific claims. We just believe -- strongly believe that it will have an inflationary impact.

Perfect.

The next question comes from Daniel [Pula] from [indiscernible].

Good morning. Can I ask you 2 questions. The first is about the Life & Health business. Could you please explain a little bit the rationale -- the business rationale of your longevity business and its importance? And the second question is about about your investment results, they were apparently very good in the quarter. The stock markets are back on record price levels and the financial markets seem to be in a quite optimistic positive mood in general, although if you look around us, things do not really support this optimism. I was wondering what the projections are in terms of your investment policy.

Okay. So let me start on the Life and Health side. So longevity transaction has become a bigger demand in the industry as you see much more pension risk transfers where companies take -- primary insurers take over pension liabilities from the industry, people. And one of the risks that the primary insurers face is longevity risk, meaning that people live longer than was originally expected. And so that's an area where reinsurance and risk in particular here, can support the primary insurers to take that risk off their balance sheet. And I think for us, this is a good opportunity also to then balance within our portfolio, the mortality exposure that we already have on our books. Reinsurers are traditionally very strong on the mortality side. Longevity goes exactly in the other direction. And so it's a good way on one hand, to support our clients for risk they would like to reduce and on our side to then use the diversification benefits of having risks that go in opposite directions, meaning that if you have a mortality improvement, it helps on the mortality side and it then impacts the longevity side. So a very natural way to manage biometric risk as an insurance company and as a reinsurance company. So that's really the business rationale, and that's also why we were very keen to also now do the first transaction in the U.S. where we have most of our mortality exposure. So your question -- second question about investment results. Maybe 2 things to say. Our strategic asset allocation has very -- is a very conservative one. They have very little equity exposure. We have some private equity but very, very minor. It's mostly fixed income, but it also has a real estate book. And in the real estate book, that's where we do -- I call that normal maintenance of the real estate portfolio, we realized some gains through the sale of some real estate. And that's why we see a higher investment result in Q1. So the overall investment result was 4.6% what we call the recurring one is 4.1% and the reinvestment, so how can you reinvest money right now it's about 4.3%. So that should give you a bit the overall composition of our results.

The next question comes from Rachel Dalton from Insurance Insider.

I noticed in your disclosure about the P&C reinsurance service results that there was a note about additional reserves for attritional losses. Could you give us any further information about that, please?

Yes, sure. So it's always when you go through the quarter, this is a normal process. You obviously, at some point, you have to cut off the date where data comes in. And then you look through the process and say, okay, is there anything else that happened? In the meantime that you don't have all the data yet, but you know that there's something coming that where you put up an IBNR reserves, which means it's reserves for claims that have already occurred, but not yet been reported, and that's what we've done at the amount of around USD 100 million.

The next question comes from Thomas Pohl from AWP.

I just wanted to ask again, I'm a bit astonished that you have absolutely no impact from [ Middle ] East conflict. You have a war exclusion you say, but does this also cover this turbulences or disruptions at transport, aviation and the kind of problems that occur now with the closing of the strait of and all the problems around it. Could you say a little bit more about that, please?

Yes. So maybe the first point here is that, yes, it is an escalation of -- it's a war right now, but it's an escalation of a conflict that's there since a long time. So we always took a cautious approach to that area specifically. So it's not a new conflict, something new that came up and was not there before. It's just an escalation of that one. As I mentioned before, we have the war exclusions, which means the direct impact is extremely limited here. And so that's why you don't see more impact coming from that event, even though it is obviously a problematic event and an event that we continue to monitor here.

But you don't see -- like I said, in like aviation, insurances or transport that the goods don't arrive at time. Is that not a thing that will hit back to you also?

No, no. That will not hit back to us. Because as I mentioned, I mean, this is an area where we already have a cautious approach.

The next question comes from Francis Churchill from Insurance Day.

How you think about the mid-year renewals? How are you feeling about what ratings doing? And are there any opportunities you see coming up in the mid-year?

Yes. Look, I think we don't speculate and we don't give any kind of forward-looking statements about what we see -- what we can expect for midyear. I think you saw the January 1 renewals. You saw the April 1 renewals, which will only be reflected in the Q2 numbers. They're not reflected in the Q1 numbers. They all looked very similar. So the same impact on those. But we don't really know exactly what's going to happen, and we also don't give forward guidance on the renews.

The next question comes from Jonathan Progin from Finanz und Wirtschaft.

I'm wondering about your cycle management. I mean we are seeing prices going down broadly. I mean, not in every business segment, the same amount of the price reduction, but still. And I remember Chubb's Evan Greenberg called the softening kind of like dump. -- what's your view on prices in more general sense? Is this like a -- still reasonable prices? Or do we see a lot of capital -- do you still see a lot of alternative capital flowing in and make it hard for you as a traditional reinsurer to reinsure business and provide your services to reasonable prices. So I mean, just what's your take on it? How does it have to change in your view very, very -- in the next few quarters? Or what's your take on it, not going like too much forward guidance, that's still like describing the current situation and how it's hard for you to do business? And then maybe two additional questions to your strategy going forward in M&A. Where do you see potential additions to your current company structure more like on the P&C Re side or more on the CorSo side, Corporate Solutions? And maybe are you looking for a Lloyd's syndicate? And also, what can we read into the moving the credit maturity new business from P&C Re to CorSo in 2026? Is that like do you want to have it in the CorSo business because you are maybe looking for what sort of potential deals? If you can give some light on that.

Okay. Very good. Let's start on the cycle management. Maybe a few comments here. So first of all, when we talk about cycle management for us, it's important that we keep relevance, which means we keep the market share. And that's what we have done. But at the same time, also keep discipline on the underwriting. So I think terms and conditions are a key part here, and we were able to keep the terms on conditions. We haven't written any aggregates that could change the risk profile. So that's that's for us what it means about cycle management. Simply to your question about price adequacy, in our view, prices are adequate. So otherwise, we wouldn't write it. If prices become inadequate, we obviously have to take actions. We don't want to write inadequate business within adequate prices. So for us, still adequate. We kept market share. But when you see the decline, this is really just the pricing cycle that impacts that. To your second question about M&A, we were very clear that M&A, if we want to do M&A, has to support the core businesses. And we would never do M&A just to do M&A. It has to have a strong business rationale. And then if you basically go through the business units, quite naturally, we would pass on P&C Re. Because P&C Re, there's no benefit in doing acquisitions because there's more capacity and the question, how much capacity you want to deploy and you get to a natural market share and you would lose that new business fairly, fairly quickly. So no interest there. It's very similar on the Life and Health side, we don't really see there a strong rationale to do M&A. So that leads you then to CorSo. And on the CorSo side, we always said we would like to strengthen the business if it helps diversify the business. We have a few areas like credit and surety, where we say this is a good business. Also that's non-correlated to the, call it traditional property insurance business. And that's also one of the rationales why we said, okay, let's centralize the credit and surety business in CorSo have one center of expertise. And also, that's why we did the small acquisition with QBE that we announced earlier in the year, which strengthened the credit and surety business here. So you should always see that if we do M&A, then it has to support the business rationale. We've done the small transactions. We don't have to do anything else if we don't find the right opportunity, and it has to be at a reasonable price. Otherwise, we would not be. So that should give you a bit of the rationale around how we think about M&A. We really have to have strong business support. And you cant -- you shouldn't expect anything big here anyway.

All right. Can I just pose an additional question, not maybe very related to your business activities, but it affects you as a big Swiss company. In June, we will vote on the popular initiative to cap the population in Switzerland to 10 million. What's Swiss Re's take on it? Surely, you will have a position there because it will affect you as a multinational company with a lot of expats working in Swiss Re and you want the best talent to be able to come to Zurich or to Switzerland to work for you. Do you expect anything that will affect your business negatively if the initiative will be accepted by the population? Or I mean, how do you prepare internally for one or other outcomes of the initiatives? Can you maybe give us some answer here?

Yes. I mean, look, first of all, we don't make any statements to popular votes. To political processes. That's not our job to do. That's the political process in Switzerland. I think you stated it well. For us, what is important is that we have access to the best people. Zurich is a key location for us. It's the main location. It's the headquarter. And we have access here to the best people, people come here as well. And then we have about, I think about 70 nationalities working for Swiss Re just here in Zurich. And so for us, this is crucial. I think we made that very clear. Other than that, I think it's now up to the political process to go through and then we see where this goes.

The next question comes from Anna Sagar from InsuranceERM.

I was just intrigued as to Swiss Re's appetite for longevity reinsurance given the 2 billion transaction with the team in the U.S. I was wondering if the U.S. was the primary geography that Swiss Re was focused on or if there are other areas -- other geographies or other regions that it would look to expand into? And also if you could talk a bit about your current capital management strategy and any plans for capital returns to shareholders, that would be greatly appreciated.

Yes, sure. So on longevity reinsurance, when you look at where is the market, where are the opportunities -- there's clearly the U.K. that stands out. You've seen the most transactions in the U.K. We've also seen now a lot of transactions happening in the Netherlands due to the pension reform. You haven't really seen a lot of transactions in the U.S. The main reason is that in the U.S. -- in the U.S. capital framework, there is no charge for longevity risk, which means there's very little incentives for a U.S. primary insurer to reinsure longevity because it doesn't really reduce their capital needs. This has changed since many U.S. companies go through the reinsurance through Bermuda to have a more economic model. Bermuda framework is much more economic than the U.S. framework. Bermuda has a capital charge. And then it becomes interesting also for the primaries to say, okay, I can now capital manage through longevity transactions. But I would say going forward, I would still see this is a slow start now with U.S. liabilities. It's much more -- you will see much more transactions. And I'm not talking about Swiss, I'm talking about the market transactions in the U.K. and also Netherlands going forward. And then your second question about capital management strategy. I mean, I can reiterate what we said. Obviously, first and foremost, we want to maintain and increase the dividend payout and then we supplement that dividend payout with what we call a sustainable share buyback program when we achieve our full year targets. And then I think for the remainder, if there's opportunities to deploy the capital in the business at the right returns, we obviously do that. If not, and we have excess capital above our target range, we would then give that back to shareholders. So that's clearly the strategy. That's also what we have done now at the end of last year, beginning of this year.

The next question comes from Noele Illien from Bloomberg.

You mentioned the sale of some real estate boosting the investment results. Is that a strategy -- is that -- was that a one-off? Or is that -- are you continuing to sell off some real estate in the coming quarters? And I think most of my other questions have been asked.

Okay. Yes, sure, quickly on the real estate, yes, this was a one-off. I mean this is not a strategy to -- I mean, to reduce the real estate exposure, not at all. We like real estate. It is a big part of our asset allocation. It's just normal maintenance, I call it, normal management of the real estate portfolio that we have that from time to time, you realize gains. Yes. But you should not expect that to repeat in the next quarters.

Okay. And was the sales in any particular region?

It was Switzerland.

The next question comes from Glenn Turpa from Intelligent Insurer.

I would like to better understand underlying growth in Corporate Solutions. You've mentioned a couple of one-offs that presumably are skewing the numbers, the non-renewal of MedEx and the shift to credit and surety. Maybe by line and by revenue versus new business CSM that you may have into the portfolio? Is there a better view we can have? And once I do have a better view of underlying revenues, and if we were to compare it to the decline in the P&C reinsurance book, I'd be curious to know if that is representative of your appetite of your outlook. Corporate Solutions seems more stable. And is it your preferred flavor for 2026?

Yes, sure. I can give a bit background. And maybe I'll start just the revenue decline that you actually saw in P&C Re is really just related to the pricing cycle that we have seen. That's the main driver here. Now if we then go to Corporate Solutions as you rightly state, I think we had a decline mainly driven by the non-repeat or the non-renewal of the Irish MedX, which we talked about already last year. So that's now fully non-renewed in a way. So if you actually take that out, it's pretty much a flat revenue development. Now we had some support also from FX. So if you take FX out, maybe it would have been a slight decrease. But the key point here is the underlying business where we actually see growth in CorSo is really coming from the international programs. That's an area we had really good success. It's also an edge where CorSo can play, and we have good progress there. And then also on alternative risk transfers. These are the 2 areas where CorSo really was able to grow the business throughout the period now. Yes. And then I would say the accident and health, I would say that's more a -- I call that more business volatility, still an area that we like, that we want to maintain that we might want to grow further. So that are the areas where you should continue to see CorSo perform.

And the relative appetite then to P&C considering you're calling it your following prices and maintaining market share?

Yes. I mean on the P&C Re, clearly, we want to keep the relevance. We want to keep the market share. We're not want to shrink them, not at all. We just manage the factor here. Prices are adequate, as I said. But revenue is just following the pricing cycle.

We now have a follow-up question from Daniel [Pula] from [indiscernible].

Yes, quickly. Just quickly, the $400 million provision, what is the underlying inflation projection you have to that number? And one other observation I just made, which I made me a bit curious. In the past, you didn't -- that's at least my perception, talk so much about market share and keeping market share. It was like almost a little bit considered given that the largest reinsurers would stick to more or less their market shares over the cycle, and it wasn't really an issue that was publicly -- at least publicly debated. Now you stress the importance of keeping that market share has something changed in that market? Are you being challenged more than in the past?

Yes. Maybe I'll just start with your second one. This has not really changed in a way. I think it's just the way we want to explain the development of the premiums and prices that you see because you've seen then the decline in property and cat that you see an increase in casualty. And both of them are not driven by the change in risk we are taking. They're really driven by how the prices develop. That was really the main reason that we wanted to highlight the market share discussion. On the inflation question, we don't disclose our underlying inflation assumptions. But I mean, they're based on the public available inflation data that you see disclosed in the market. And here, we just took the -- obviously, you have to go in and it's judgmental. You don't know exactly where the energy prices will end up for the year, but we have the assumption that we will see significant -- we see a continuation of increased energy prices, and that's how we then calculated the impact here.

That was the last question. I would now like to turn the conference back over to you, Elena Logutenkova, for any closing remarks.

All right. Thank you, everyone, for joining our call this morning. If there are any further questions, please feel free to reach out to Media Relations. And otherwise, we wish you a lovely day. Bye-bye.

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