Reinsurance Recap: 2022 Results Mixed as Market Improves
Full-year 2022 financial results, reported by a handful of international groups that write reinsurance, show mixed results in a market full of challenges — ranging from inflation to the Ukraine war to growing losses from natural catastrophes.
A wrap-up of these 2022 results follows for Munich Re, Swiss Re, Arch Capital, RenaissanceRe, and Everest Re — ranked in descending order by size of overall gross written premiums.
Munich Re
Munich Re posted a full-year profit of $3.6 billion (€3.419 billion) in the 2022 financial year, up from €2.9 billion in 2021, and surpassing its 2022 profit guidance of $3.5 billion.
The group’s fourth-quarter profit was $1.6 billion, compared to $918.5 million in Q4 2021. (Editor’s Note: Munich Re originally reported its figures in euros. For the sake of consistency with the other companies, the figures have been converted into dollars.)
“Munich Re absorbed the crises of 2022 well and continues to grow profitably,” Chairman Joachim Wenning said in a statement.
The group’s gross premiums written rose to $70.8 billion, a 12.7% increase over the $62.9 billion in 2021.
In the 2022 financial year, Munich Re’s return on equity amounted to 13.5%.
Munich Re’s property/casualty reinsurance segment contributed $2 billion to the 2022 result. P/C reinsurance premium volume grew “robustly” to $36.3 billion during the year, compared to $30.4 billion in 2021.
Despite high natural catastrophe losses in the market, the P/C combined ratio decreased to 96.2 of net earned premiums — an improvement over 2021 when the combined ratio was 99.6. Munich Re expects the combined ratio will improve to approximately 86 during 2023 for its reinsurance business.
Swiss Re
Swiss Re reported a 67% decline in net income to $472 million and a return on equity of 2.6% for the full-year 2022, compared with net income of $1.4 billion and an ROE of 5.7% for 2021.
“The decline was driven by the impact of economic inflation on actual and expected claims in the property and casualty businesses, mark-to-market impacts on listed equity investments and large natural catastrophe claims above expectations,” the company said.
Swiss Re’s Group Chief Executive Officer Christian Mumenthaler said the decline in 2022 results was driven by the impact of a challenging year, “marked by the war in Ukraine, surging inflation, the tail end of the COVID-19 pandemic and elevated natural catastrophe losses.”
For Q4 2022, Swiss Re reported net income of $757 million, up significantly from $179 million reported in Q4 2021.
Net premiums earned and fee income rose to $43.1 billion for 2022, a 0.9% increase over $42.7 billion reported in 2021. The group’s gross premiums written (which include its P&C Re, L&H and Corporate Solutions units) rose to $47.9 billion for FY2022, compared with $46.7 billion in 2021.
P&C Re reported a net income of $312 million for 2022, supported by fourth-quarter net income of $595 million. The full-year P&C Re result was negatively affected by higher-than-expected economic inflation, for which Swiss Re set up reserves of $1.0 billion. (The reserves include prior-year and current-year reserves in the form of IBNRs.)
Net premiums earned for P&C Re came to $22 billion in 2022, compared to $21.9 billion in 2021.
Swiss Re’s P&C Re reported a combined ratio of 102.4 for the FY 2022, compared with 97.1 in 2021. The company blamed its underwriting loss on large natural catastrophe losses, negative prior year development and the impact of the Ukraine war.
Arch Capital
Arch Capital reported net income available to common shareholders of $1.4 billion for the full-year 2022, a 31% decrease from $2.1 billion reported the previous year. For fourth quarter 2022, Arch generated net income of $849.5 million, compared to $613.1 million for the 2021 fourth quarter.
Full-year gross written premiums for the group (which includes its reinsurance, insurance and mortgage segments) rose 23% to $15.3 billion from $12.5 billion in 2021, while they rose 32.6% during the fourth quarter to $3.8 billion from $2.9 billion in fourth-quarter 2021.
Gross premiums written by the reinsurance segment in the 2022 fourth quarter were 77.4% higher than in the 2021 fourth quarter.
Arch Capital Group and its subsidiaries reported a combined ratio of 81.6 for 2022, compared with 84.3 in 2021. For the fourth quarter, it reported a combined ratio of 73.5, compared with 77.6 in Q4 2021.
Its reinsurance segment reported a combined ratio of 92.2 for the full year, compared with 94.2 for 2021, with gross written premiums jumping 36% to $6.9 billion. The fourth quarter 2022 reinsurance combined ratio was 78.4, compared with 83.1 in the final quarter of 2021.
“For the fourth quarter of 2022, each of our three underwriting segments produced exceptional results,” according to Arch Capital’s CEO Marc Grandisson.
“Our quarter’s results were buoyed by a lower than average cat loss experience, a significant favorable development in mortgage reserves and a higher level of profitable earned premiums from our recent growth,” he said during an earnings call with analysts.
With $1.8 billion of operating income and an operating return on equity of 14.8% for the year, Grandisson said, 2022 was the company’s third consecutive year of sustained premium and revenue growth.
He said the company’s net premium written growth from its P/C business “was exceptional.”
“The reinsurance segment’s [full year net written premium] grew 51% for 2022 as the team seized on market dislocations, while our insurance segment grew a robust 21% on the year.”
Everest Re
Everest Re reported net income of $597 million for full-year 2022, a 56.7% drop from $1.4 billion reported for 2021. For the fourth quarter, the company had a net income of $496 million (vs. $431 million in the same quarter of 2021), driven by continued underwriting margin improvement.
“Everest’s fourth-quarter results capped a strong year of consistent execution and positive momentum for the company,” said Juan C. Andrade, Everest president and CEO.
“We grew both underwriting franchises [insurance and reinsurance] with improved margins, significantly reduced volatility and generated solid returns despite ongoing market uncertainty and another elevated catastrophe year.”
For the full year 2022, gross written premiums were nearly $14 billion, a 6.9% increase over $13.1 billion in 2021. For fourth quarter 2022, Everest Re reported gross written premiums of $3.6 billion for the group, an increase of 9% from $3.4 billion reported in fourth quarter 2021.
In constant dollars, gross written premiums rose 21% for insurance and 3.7% for reinsurance (excluding reinstatements).
The group’s full year combined ratio was 96.0, an improvement from 97.8 reported in 2021. For the fourth quarter, the company reported combined ratios of 87.8 for the group, 86.4 for reinsurance and 91.4 for insurance.
RenaissanceRe
RenaissanceRe reported a net loss of $1.1 billion for the year, compared with a $73.4 million loss for 2021. For the fourth quarter of 2022, the company reported net income of $448.1 million, up from $210.9 million for the same period in 2021.
Gross written premiums for 2022 were $9.2 billion for 2022, compared to $7.8 billion the previous year. The 21.2% growth in net premiums written during the year were driven by 41.6% growth in casualty and specialty.
Despite the annual loss, the company reported a 97.7 combined ratio, showing an improvement from the 102.1 reported for 2021.
“We finished the year with an excellent quarter, reporting an annualized operating return on average common equity of 29.6% driven by strong underwriting results, significantly increased net investment income and stable management fees. For the full year, we delivered a 6.3% operating return despite a net negative impact of $807.6 million from catastrophe losses,” Kevin J. O’Donnell, president and chief executive officer, said in a statement.
“At the January renewal we demonstrated leadership and discipline, achieving the step change in rate and terms investors required, while providing the reinsurance capacity customers needed,” he added.
The company’s weather-related large losses during 2022 had an $807.6 million net negative impact on the net loss attributable to common shareholders, adding 20.0 percentage points to the consolidated combined ratio.