US mortality still takes toll on Swiss Re’s L&H book
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Profitability for Swiss Re’s life and health reinsurance segment is returning to pre-pandemic levels, the company said on Friday, but the business is still impacted by elevated excess mortality in the US.
L&H Re reported a net income of $393m ($308m) in the first half of 2023, compared with $2m for the same period in 2022. The figure in H1 2019 - just before the impact Covid-19 became material - was $459m.
The Swiss reinsurer explained, compared to last year, L&H Re benefitted from much lower Covid-19 claims as well as from higher investment income.
But the half-year $393m net income is still way below the full-year target of $900m. Chief executive Christian Mumenthaler said excess mortality in the US was coming down “very significantly” in H1 this year but despite the improvement, it is “not zero”.
Presenting the group’s half-year results to journalists, he said: “There's still a heavy wave of flu and Covid in [the fourth quarter] and the beginning of Q1 of this year, which has an impact both in Q1 and Q2 because we get some delayed claims reporting. Being a reinsurer, we have to wait for our primary companies to deliver the data to us.”
Asked about the impact of the recent heatwaves in Southern Europe on the firm’s mortality and longevity business, Mumenthaler told mallowstreet that older people, especially the frail, are particularly affected by heatwaves, but Swiss Re’s book in Europe mainly consists of mortality, whose policyholders are younger, as opposed to longevity.
He explained: “In Europe, it's mostly mortality and mostly with the younger people - those who buy typical products, for example, to protect their mortgage or to protect their young families. We have never seen significant effects on our book from heatwaves in the past and I wouldn't expect it [to be significant this year].”
Although Swiss Re has a longevity book in the UK for older policyholders, Mumenthaler said the firm does not yet have the data to understand the impact heatwaves may have on the business.
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