Swiss insurers’ see aggregate annual profits rise by 44%

Written by Adam Cadle

11/09/2020

Swiss insurance companies achieved aggregate annual profits of CHF 15.2bn in 2019, which represents a 44% increase over the previous year.

In its latest Insurance Market Report 2019, the Swiss Financial Market Supervisory Authority (FINMA) said while life insurers reported a moderate increase in their annual profits (+8% to CHF 1.5bn), non life insurers experienced a real jump in profits of CHF 3.3bn or 49% to CHF 10.1bn.

Markedly higher gains from investment activity compared with the previous year were principally responsible for the improved annual results.

Reinsurers were able to increase their annual profits from CHF 2.4bn in the previous year to CHF  3.6bn in the year under review (+49%). Swiss insurance companies’ equity increased by CHF 3.9bn or 4.7% overall to CHF 87.8bn in the 2019 financial year, while the return on equity was 17.34%, an increase of 4.73 percentage points compared with the previous year.

The cover ratio of tied assets rose by one percentage point during the reporting year and was 112% at year end. The solvency ratio according to the Swiss Solvency Test was 226%, an increase of seven percentage points compared with the previous year.

Total investments by Swiss insurance companies fell by 0.9% in 2019 and amounted to CHF 541.8bn at the end of the year. Life insurance companies fell by CHF 12.8bn (4%) to CHF 307.8bn, while non-life insurance companies increased slightly and amounted to CHF 142.3bn at the end of the year.

Investments by reinsurers increased by 7.1% to CHF 91.6bn. The low interest rate environment resulted in a further decline in fixed-interest investments in the portfolio of Swiss insurance companies. However, they remained the dominant asset class, making up 45% of total investments. Life insurers held 50% (–2 percentage points compared with the previous year) while non-life insurers held 35% (–2 percentage points compared with the previous year) and reinsurers held 42% (unchanged) of their total assets in fixed-interest securities. Real estate and mortgages decreased in the year under review, while the value of reported alternative investments and participations increased.

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