Swiss Re (SSREF, Financial) has been downgraded by Dominic O’Mahony, an analyst from BNP Paribas Exane. The rating was lowered from Neutral to Underperform, accompanied by a price target set at CHF 133. O’Mahony highlights that the current valuation levels have significantly reduced the "margin for error" within the European insurance sector. This adjustment reflects concerns about the sustainability of current valuations in this market segment.
SSREF Key Business Developments
Release Date: May 16, 2025
- Net Income: USD1.3 billion in Q1 2025.
- Return on Equity: 22% for Q1 2025.
- Large Losses: USD900 million in P&C, with LA wildfires contributing around two-thirds.
- Insurance Revenue: USD10.4 billion in Q1 2025, down from USD11.7 billion last year.
- Life & Health Re Net Income: USD439 million in Q1 2025.
- Admin Cost Reduction Target: On track to reduce by at least USD100 million in 2025.
- Combined Ratio - P&C Re: 86% in Q1 2025.
- Combined Ratio - Corporate Solutions: 88.4% in Q1 2025.
- Investment Return on Investment (ROI): 4.4% in Q1 2025.
- Tax Rate: 14% in Q1 2025.
- SST Ratio: Estimated at 254% for Q1 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Swiss Re AG (SSREF, Financial) reported a strong start to 2025 with a net income of USD 1.3 billion and a return on equity of 22%.
- All business units contributed positively to the results, supported by strong investment returns.
- The company achieved a 6% volume growth in P&C Re, despite a modest net price change of negative 1.5%.
- Life & Health Re produced a solid net income of USD 439 million, slightly above the pro rata target.
- Swiss Re AG (SSREF) is on track to reduce its cost run rate by at least USD 100 million this year, contributing to a USD 300 million target by 2027.
Negative Points
- The P&C Re and Corporate Solutions segments faced significant large losses amounting to USD 900 million, primarily due to the LA wildfires.
- Insurance revenue for the group decreased to USD 10.4 billion from USD 11.7 billion in the previous year, partly due to nonrecurring IFRS transition effects.
- The P&C Re segment experienced a decline in CSM release, driven by prudent initial loss picks and slightly lower margins.
- The macroeconomic environment remains uncertain, with potential risks from increased inflation and ongoing tariff situations.
- Corporate Solutions faced higher-than-expected man-made claims totaling USD 150 million in the quarter.
