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Swiss Re reports higher FY'19 net income YOY; board to propose dividend increase

Swiss Re AG logged consolidated group net income of $727 million for 2019, higher than $421 million from the prior year.

Return on investments stood at 4.7%, compared to 2.8% in 2018. The improvement was driven by a strong equity market performance, including a significant contribution from the sale of the group's investment in the Brazilian insurance group SulAmérica SA, as well as gains within the fixed income portfolio.

The property and casualty reinsurance division reported net income for the full year of $396 million, up from $370 million in 2018. The result reflected large natural catastrophe and man-made losses of $2.3 billion as well as proactive measures to address ongoing trends in U.S. casualty.

The large natural catastrophe losses in 2019 were driven mainly by typhoons Hagibis and Faxai in Japan, Hurricane Dorian in the Atlantic and wildfires, floods and hailstorms in Australia. The result was further impacted by late claims development from Typhoon Jebi, and by man-made losses including the Ethiopian Airlines crash and the subsequent grounding of the Boeing 737 MAX fleet.

The P&C reinsurance division's combined ratio worsened to 107.8% from 104.0%. Swiss Re said its normalized combined ratio was in line with previous estimates and is expected to improve to 97% for 2020.

Swiss Re renewed contracts with $10 billion in premium volume in the January renewals, representing a 2% volume increase compared with 2019. Increases in property business, particularly in the natural catastrophe book, were partly offset by a reduction in casualty lines.

The P&C reinsurance division achieved a nominal price increase of 5% in this renewal round. Risk-adjusted price quality was unchanged, reflecting lower interest rates and more conservative loss assumptions.

The life and health reinsurance division logged net income for 2019 of $899 million, compared with $761 million in 2018. Return on equity improved to 12.4% from 11.1% in 2018 and was above the business segment's target range of 10% to 12%.

The corporate solutions business' net loss widened year over year to $647 million from $405 million, while its combined ratio worsened to 127.9% from 117.5%. Swiss Re said the result was impacted by actions announced July 31, 2019, to reposition the business and strengthen reserves. The result was also affected by large and medium-sized claims, mainly from prior accident years related to the recent deterioration in the U.S. casualty business.

The group said its capital position remains very strong with a Group Swiss Solvency Test ratio above the 220% target level.

The board of directors will propose a dividend of CHF5.90 per share for 2019, representing a 5% increase. The dividend will be paid after shareholder approval at the April 17 annual general meeting. The board will also propose a public share buyback program of up to CHF1 billion.

Additionally, Jonathan Isherwood was appointed CEO of Swiss Re's reinsurance Americas unit, starting April 1. He was also named regional president Americas and a member of the group executive committee, effective Aug. 14.

Isherwood will succeed Eric Smith, who will retire.

Swiss Re also said it will gradually cut business support in underwriting and asset management to the world's 10% most carbon-intensive oil and gas companies by 2023, and it increased its green, social and sustainable bond target to at least $4 billion by 2024 from $1.5 billion. For its own operations, Swiss Re has committed to reaching net zero emissions by 2030.