Research Update: Swiss Re 'AA-' Ratings Affirmed; Outlook Revised To Negative

Following lower-than-expected earnings in recent years, Swiss Re reported a net loss of $225 million for first-quarter 2020, driven by the weak technical performance of its property/casualty (P/C) business. We believe this partly stems from large natural catastrophe claims, the impact of COVID-19, and mark-to-market losses, which reflect the deterioration in financial markets. We recognize that Swiss Re is pushing pricing increases on the P/C side, as well as at Corporate Solutions (CorSo), and is progressing with portfolio pruning of CorSo to improve its underwriting performance. However, we believe that uncertainty about the turnaround of its underwriting performance persists. We are affirming the 'AA-' ratings on Swiss Re's core subsidiaries and revising the outlook to negative from stable. The negative

...- Following lower-than-expected earnings in recent years, Swiss Re reported a net loss of $225 million for first-quarter 2020, driven by the weak technical performance of its property/casualty (P/C) business. We believe this partly stems from large natural catastrophe claims, the impact of COVID-19, and mark-to-market losses, which reflect the deterioration in financial markets. - We recognize that Swiss Re is pushing pricing increases on the P/C side, as well as at Corporate Solutions (CorSo), and is progressing with portfolio pruning of CorSo to improve its underwriting performance. However, we believe that uncertainty about the turnaround of its underwriting performance persists. - We are affirming the '##-' ratings on Swiss Re's core subsidiaries and revising the outlook to negative from stable. - The negative outlook indicates the possibility that we could lower the ratings by one notch if the underwriting performance of Swiss Re's P/C business does not perform broadly in line with...

Research Update