Reinsurer Swiss Re swung into a net loss in the first quarter of 2020 as the impact of the coronavirus outbreak began to bite, it said on Thursday.
The Zurich-based company booked a hit of $476 million for anticipated and actual claims that were mainly related to the cancellation or postponement of events like the Olympics.
It also took a $300 million loss from its investments amid market turbulence.
Chief Executive Christian Mumenthaler made clear the outbreak was “far from over” and finance chief John Dacey said it was “difficult to make predictions” for overall losses to the industry and Swiss Re.
The pandemic’s “broader economic and social consequences will be far-reaching,” Mumenthaler said.
The quarterly net loss of $225 million during the period compared with profit of $429 million a year earlier. Analysts with Barclays said the loss was not as bad as they or the wider market had expected.
“Swiss Re’s business remains resilient despite the financial impact of the crisis on our results,” Mumenthaler said.
The shares traded down 0.4% early in Zurich.
The loss during the first three months of the year follows a smaller-than-expected profit in 2019 due to claims for a series of man-made and natural disasters, as well as expenses for its U.S. casualty business.
The company said its corporate insurance arm, which has recently reported losses and is undergoing restructuring, set aside $223 million in reserves for anticipated claims related to the coronavirus outbreak.
That was mainly for insurance to protect against event cancellations, a business that it is exiting.
In another dent to earnings, Swiss Re also said its life capital division had posted a $261 million loss as it marks to market a drop in the share price of Phoenix Group, which is taking over its ReAssure business in a cash and share deal.
Swiss Re’s combined ratio in its property and casualty division, a key measure of profitability, worsened slightly to 110.8% versus 110.3% a year earlier. Readings below 100 indicate profitability.
($1 = $1.0000) (Reporting by Tom Sims; editing by Michelle Martin and Jan Harvey)
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