Re/insurers reveal plummeting profits in 2020 results

But optimism prevails as industry leaders extol resilience and future growth. Intelligent Insurer reports.

As a flurry of annual 2020 results were published by re/insurers in the second half of February, the overarching trend was one of dramatic falls in profit caused in the main by the pandemic.

Munich Re’s profits plummeted by 55 percent; SCOR reported a 44 percent plunge in profits; and Third Point Re revealed a 28 percent profit drop, with other businesses reporting significant nosedives.

But the majority of business leaders also highlighted the resilience and growth opportunities of their firms.

Munich Re’s reinsurance business dragged down the company’s 2020 results due to high pandemic-related losses and natural catastrophes. But the rate improvements allowed the company to grow its business in the January renewals. The German reinsurer anticipates the market environment will remain positive and offer attractive growth opportunities in 2021.

It generated a full-year profit of €1.2 billion in 2020, down more than 55 percent from €2.7 billion reported a year ago. However, its gross written premiums (GWP) increased by 6.7 percent year on year to €54.9 billion, compared with €51.45 billion in the prior year.

Joachim Wenning, the reinsurer’s chairman of the board of management, said: “In spite of the tremendous challenges posed by COVID-19, Munich Re closed out 2020 with a clear profit—and our dividend remains dependable.

“In 2021, we expect to meet the profit target that we envisaged prior to the pandemic. All the pieces are in place.”

Pandemic shock

SCOR’s 2020 results showed its profits had been dented significantly year on year. It reported a full-year net profit of €234 million for 2020, reflecting a 44.5 percent decline from the previous year when it generated a net profit of €422 million.

GWP increased slightly to €16.4 billion in 2020, from €16.34 billion in 2019.

The reinsurer said that so far it has coped well with the “historic shock” of the COVID-19 crisis, and chief executive Denis Kessler has predicted stronger reinsurance growth along with a positive pricing dynamic, insisting that SCOR is “very well positioned” to scale its global platform and seize market opportunities in 2021.

“SCOR ended 2020 profitably and solvently,” he said. “The group’s fundamentals remain very strong, as demonstrated by the excellent results we would have recorded in the absence of COVID-19—which cost the group €640 million in 2020—as well as by the level of solvency achieved at the end of December.”

Kessler added: “SCOR is very well positioned to benefit from the general market hardening in P&C reinsurance, as demonstrated by the excellent renewals recorded at January 1, 2021.”

Bermuda-based reinsurer Third Point Re admitted it was discontented with its performance in 2020 as profits slipped by more than 28 percent to $143.5 million in full-year 2020, from $200.6 million profit in 2019.

GWP were $588 million for the full year 2020, compared with $631.8 million in 2019, and its combined ratio deteriorated to 110.3 percent in 2020, compared with 103.2 percent in 2019.

But the company said it was looking at ways to grow intelligently as it embarks on the next chapter following its anticipated merger with Sirius Group.

“SCOR is very well positioned to benefit from the general market hardening in P&C reinsurance.”

Denis Kessler, SCOR

Favourable conditions

French insurer AXA posted a net profit of €3.16 billion in 2020, representing a decline of 18 percent from €3.86 billion in 2019 as it reeled from the impact of COVID-19 claims and lower new business activity. Its total revenues for the year were down just 1 percent to €97 billion, reflecting strong growth in the first and the fourth quarter of 2020.

Thomas Buberl, chief executive officer of AXA, said: “AXA’s revenues were resilient in 2020, down just 1 percent compared to the previous year, reflecting the relevance of our strategic choices and business mix. Our preferred segments, P&C commercial lines, health and protection, continued to perform well, growing by 3 percent in 2020 and accelerating in the fourth quarter (+5 percent).

“We are confident in our earnings outlook and have set a 2020 starting base of €6.3 billion underlying earnings for our 2021–2023 strategic plan targets.”

Swiss Re swung to a full-year loss of $0.9 billion for 2020 as the insurer was battered by $3.9 billion of COVID-19 claims/reserves and unusually high cost natural catastrophes. The loss came despite a strong underlying performance and reduced exposure to sectors that were vulnerable to the pandemic.

The reinsurer made a net loss of $878 million in 2020, compared with a net profit of $727 million in 2019. Excluding $3.9 billion of pre-tax COVID-19-related claims and reserves, Swiss Re’s net income came in at $2.2 billion.

Group GWP rose to $42.9 billion in 2020 from $42.2 billion in 2019.

Group chief executive Christian Mumenthaler and chief financial officer John Dacey struck an optimistic tone stating their confidence in the outlook for 2021 as they highlighted the company’s strong capital position and favourable market conditions.

Mumenthaler said: “Our group has gone through this crisis with confidence and strength, and in our role as a shock absorber we are doing our part to help mitigate the challenges of the pandemic and improve resilience to future systemic risks.

“While some further COVID-19 losses are expected in 2021, we have dramatically reduced relevant exposures in P&C lines. I am very encouraged by broad-based improvements in portfolio quality and underwriting margins in P&C Re and Corporate Solutions, including in the January renewals.”

“Our preferred segments, P&C commercial lines, health and protection, continued to perform well.”

Thomas Buberl, AXA


Allianz Holdings bucked the broader trend of falling profits as it reported a 196 percent increase in operating profit for 2020 from the previous year. CEO Jon Dye hailed the results as illustrating the resilient nature of the business and the benefits of its diversity.

The company’s operating profit for 2020 reached £290 million, an increase of 196 percent compared with 2019. Its GWP surged to £3.9 billion, a 97 percent increase on the same period a year earlier, largely driven by the integration of L&G General Insurance, which became part of LV= GI in January 2020.

The company’s combined ratio for the period was 94.4 percent, an improvement on the 98.5 percent it posted in 2019.

Dye said: “The results demonstrate the resilience of our business and the benefits that can be gained through managing a large and diverse portfolio. The COVID-19 crisis has impacted different lines of business in different ways, for example the reduction in claims frequency in some books and the significant claims for business interruption.

“Other external factors impacting the 2020 figures included rising claims inflation and supply chain challenges, large losses, weather events and the general slowdown in economic activity.

“But our business is resilient. Our successful 2020 result was built on the ability of our colleagues to adapt to new working environments, the trust and support of our brokers, intermediaries, customers and suppliers and our flexibility to adapt our products, processes and protocols to the changing demands and dynamics of the market.”

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Image: Shutterstock / Dilok Klaisataporn

“Our group has gone through this crisis with confidence and strength.”

Christian Mumenthaler, Swiss Re

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