Good morning or good afternoon. Welcome to Swiss Re's nine months 2026 results conference call and live webcast. Please note that today's conference call is being recorded. At this time, I would like to turn the conference over to Andreas Berger, Group CEO. Please go ahead.
Thank you very much, and good morning or good afternoon to all of you. I appreciate you taking the time to join us today. As always, before our Group CFO, Anders Malmström, walks you through the details of our nine months results, I would like to start with some brief remarks. Today, we are pleased to report another strong quarter with a net income of $1.3 billion. This brings our net income for the first nine months of 2026 to $4.2 billion, representing an annualized return on equity of 22.5%. These results put us firmly on track to meet our full-year net income target of $4.5 billion. Importantly, this performance reflects strong contributions from all three business units, demonstrating the strength of our diversified business model and providing a solid foundation to navigate an increasingly competitive market environment.
Life & Health Reinsurance delivered another quarter of clean earnings, resulting in a net income of $1.5 billion for the first nine months. This reflects the strong underlying profitability of our large in-force portfolio, supported by favorable experience, most notably U.S. mortality. The business unit, Life & Health Re, is well on track to achieve its 2026 net income target of $1.7 billion and continues to provide an important source of earnings diversification to the group. Our P&C businesses continue to deliver strong underwriting results, with a combined ratio for the first nine months of 77.3% for P&C Re and 86.4% for Corporate Solutions. In the third quarter, the combined ratios were 78.3% and 87%, respectively.
As a reminder, the combined ratio for Corporate Solutions, as a primary insurance company, is calculated on a different basis than that of P&C Re as a reinsurance company, reflecting a gross revenue view and including all expenses. On a like-for-like basis, the Corporate Solutions combined ratio for the first nine months would have been at 79.1%. We achieved these results despite a notable increase in loss activity in the third quarter compared with the first half of the year. Across P&C Re and Corporate Solutions, large losses amounted to around $800 million, including approximately $250 million from the earthquake in Colombia. We also experienced an uptick in small and mid-sized losses, alongside above-average man-made losses. Nevertheless, given the third quarter carries the highest natural catastrophe budget of the year, the overall loss burden across large and attritional losses in the quarter remained within our expectations.
This performance demonstrates the strength and quality of our portfolios, which are particularly important as we navigate a more challenging phase of the property and nat cat cycle. In this environment, our response remains unchanged. We continue to apply our long-term approach, combining disciplined underwriting and greater cost efficiency with commercial ambition, working closely with clients and brokers to identify attractive opportunities. In practice, this means prioritizing portfolio quality over top-line growth by maintaining prudence on loss picks and upholding underwriting discipline. At the same time, we continue to expand our cycle-decorrelated businesses, further enhancing the resilience and diversification of our earnings. A good example in this acquisition is the acquisition of QBE's global trade credit and surety business, which we completed in the third quarter.
This transaction is highly complementary to Corporate Solutions' capabilities, strengthening our presence in trade credit and providing an additional source of earnings that is less dependent on the property market cycle. With this acquisition, credit and surety is expected to represent around 15% of Corporate Solutions' revenues going forward and will contribute approximately one-third of its underwriting earnings in a normal year. Beyond acquisitions, we're also increasing our scale through strategic partnerships. Today, Corporate Solutions announced a strategic cooperation with Old Mutual Insure South Africa, building on similar partnerships with GNP Seguros in Mexico and Bajaj General Insurance in India, which we announced alongside our half-year results. This partnership growth platform is an important part of Corporate Solutions' strategy to expand its presence in attractive growth markets by combining our global underwriting expertise and capabilities with the local market knowledge and distribution networks of established partners.
This approach allows us to better serve clients while scaling our business efficiently. We also continue to simplify our operations by reducing organizational complexity. Increasing speed to market and enabling closer engagement with clients is key. These efforts are strengthening our competitiveness and supporting long-term profitability while increasing cost efficiency. We remain on track towards our target of reducing operating costs by $500 million by 2028, as announced, having increased the savings targets from $300 million by 2027 earlier this year. Importantly, we continue to invest in strategic areas, including underwriting, client-facing capabilities, data and AI solutions, while pursuing attractive business opportunities and maintaining underwriting and pricing discipline. Finally, capital management is equally important to how we navigate the cycle. Anders will update you where we stand on this capital management situation.
Looking ahead of the remainder of the year, our priorities remain unchanged, delivering on our financial targets and the group's overall resilience. Our strong earnings performance in the first nine months gives us additional flexibility in the fourth quarter to build on the resilience measures already taken throughout the year, subject obviously to large loss activity. Beyond 2026, our robust foundations and the diversification provided by our three business units give us confidence in our ability to navigate different market cycles successfully. On 4th of December, we will announce our financial targets for 2027 and expect to provide an update on capital management. With that, I'll hand over to Anders, who will provide you more details on our nine months financial results. Thank you.
Thank you, Andreas, and good morning or good afternoon to everyone on the call. Andreas has taken you through the highlights of our strong performance for the first nine months of 2026. Let me add a few further details on the financial results before we move to the Q&A. In P&C Re, the insurance service result amounted to $2.7 billion. This was driven by a CSM release of $1.7 billion, down from $2.1 billion in the prior year period, and reflects the more competitive pricing environment, as well as the earn-through of prudently set initial loss picks. These factors also contributed to a higher new business loss component of close to $400 million. We reported a positive experience variance of $1 billion in the first nine months, including $300 million for the third quarter.
The positive experience related to the current year amounted to around $300 million in the first nine months, including negative experience of around $50 million in the third quarter. Lower-than-expected large nat cat losses contributed to almost $1 billion of positive experience in the first nine months, including $300 million in the third quarter. This was partially offset by an IBNR allowance of around $300 million for potential late reporting, established primarily in the first and third quarter. In addition, we experienced an accumulation of small and mid-sized claims and higher-than-expected man-made losses in the third quarter, together amounting to approximately $250 million. Positive experience related to prior years amounted to around $700 million in the first nine months of 2026, whereof $350 million in the third quarter.
For the first nine months, this reflects reserve releases across short-tail lines, particularly property, partially offset by additions to IBNR reserves for potential inflationary impacts from the Middle East conflict in the first quarter and for long-tail lines in the second and third quarter. Taking all of this together, P&C Re reported an excellent combined ratio of 77.3% for the first nine months, comfortably within its full-year target of below 85%. Let me also briefly touch on new business CSM before moving to Corporate Solutions. P&C Re generated new business CSM of $1.8 billion compared to $2.5 billion in the prior year period. The year-on-year decline of 12% in the third quarter was less pronounced than the 28% decline in the first half of the year.
This was mainly driven by business mix effects, a more favorable contribution from larger contracts in July, and a higher discounting benefit, which supported new business CSM generation in the quarter. Looking at the first nine months, the reduction in new business CSM and increase in the new business loss component are consistent with the increase of approximately four percentage points in the nominal combined ratio on the $19.5 billion of treaty business renewed through July. Moving on to Corporate Solutions. The business unit continued to deliver strong underwriting results with a combined ratio of 86.4%. The insurance service result of $863 million was supported by a CSM release of $559 million. Experience variance was positive at $325 million, driven by favorable experience related to past services across various lines of business.
In addition, the benign large nat cat experience was largely offset by the usual allowance for potential claim seasonality due to late reporting. New business CSM amounted to $418 million compared with $500 million in the previous year period. This reflects the continued competitive pricing environment in certain lines, partially offset by the inclusion of P&C Re's credit and surety business. Turning now to Life & Health Re. The business continued to benefit from the actions taken over recent years, delivering a strong net income of $1.5 billion for the first nine months. The insurance service result amounted to $1.6 billion, reflecting the continued contribution from the large in-force portfolio, generating a CSM release of $1.1 billion. The result was further supported by positive experience variance, particularly from U.S. mortality, mainly driven by fewer large individual claims than expected.
New business CSM amounted to $488 million compared with $833 million in the prior year period. This is the result of fewer large transactions and a more selective approach to new business, particularly in Asia Pacific. In addition, Life & Health Re's risk adjustment balance decreased by around $570 million in the third quarter, mainly driven by changes in interest rates. Importantly, this does not affect future earnings. Similar to the CSM, risk adjustment releases are based on locked-in interest rates, while the risk adjustment balance reflects current interest rates. Any resulting changes in the balance are recognized in OCI. The investment portfolio remained a meaningful contributor to earnings in the first nine months, delivering a 4.0% return on investment and more than $3 billion of recurring investment income. The reinvestment yield strengthened further in the third quarter, reaching 5.6% compared with 5.2% in the previous quarter.
This reflects ongoing opportunities to reinvest at attractive rates. These developments continue to support the recurring earnings contribution from our investment portfolio. Turning to capital, Swiss Re continues to maintain a strong capital position with an estimated group SST ratio of 259% as of 1st of October 2026, above our target range of 200%-250%. The 5 percentage point decline compared to 1st of July reflects the reversal of the temporary benefit from subordinated debt issued to partially refinance 2027 redemptions, the dividend accrual, and a modest increase in target capital, largely offset by capital generation and favorable interest rate movements. We are also progressing well on the $1.5 billion share buyback program launched in March. As for end of October, the program is almost fully executed with approximately 95% repurchased. Finally, turning to our priorities for the remainder of the year.
Once we have achieved our full-year earnings target, we will place even greater emphasis on further strengthening the group's resilience, building on the actions already taken throughout the year. We have several levers available, including realizing losses on fixed income investments to lock in higher yields, as well as taking additional actions to strengthen balance sheet resilience across the group, where warranted and in accordance with IFRS. With that, I will leave it here and hand over to Thomas to open the Q&A.
Thank you, Andreas. Thank you, Anders . Hello to all of you from my side as well. As usual, before we start, if you could limit yourself to two questions. Should you have a follow-up question, please rejoin the queue. With that, operator, could we have the first question, please?
Sure. The first question comes from Shanti Kang, Bank of America. Please go ahead.
Hi, afternoon. Thank you for taking my question. First question was just on Life & Health Re, and on new business CSM, that came in a bit softer than I was expecting and a bit of a surprise to me today. I think you mentioned that some of that is increased selective action on the APAC book. I am just wondering whether or not that is a step change in philosophy today versus previous periods, and maybe why that is coming through today. Should we be rebasing our views from here, or is this sort of like a one-off? The second one was also on new business CSM, but in P&C. Granted, we understand that that would come down over time, which makes sense, but I am just curious to think about the relationship between the amortization rate and the new business CSM growth into 2027. Thank you.
Okay, so let me start on the Life & Health Re side. I mean, as I mentioned on the call, I think we had less new business CSM than previous years, particularly driven by lower large transactions. Also, as I mentioned, basically more selective, in particular in APAC. I mean, you recall that last year we basically announced that we paused new business in Australia, just as one example. Now, I think in the longer run, our clear expectation and target is to be at above 100% CSM sustainability. We will not be this year there, but I think this is a clear stated target that you should expect us again to be over the next couple of years. Always keep in mind that transactions can be lumpy, so you can have a year material above, you can have a year a little bit below.
Clearly, target is to be above 100% new business CSM in Life & Health. Moving over to the P&C side, I mean, you should assume, the CSM, the release, happens over the year, as basically assuming when you also see the claims happening. So it is in accordance with the pattern from a claims perspective, whereas the new business CSM is obviously when you write the business, and that is primarily in the first half of the year. So that is why you have a slight kind of disconnect between when it releases and when it gets written.
Thank you. Shanti, could we have the next question, please?
The next question comes from Kamran Hossain from JPMorgan. Please go ahead.
Hi. Got two questions. The first one is, you kind of talked about reinvestment, it has gone up 5.6%. How long should it take for us to see that come through versus your 4.3%? So kind of, you know, how many bps a year should that increase from here? Second question is related to kind of the same topic, but, you know, higher investment return, higher discounting. I think your discounting, of course, for standalone was 10.5%, but there is some reserving actions. Could you help us understand what the underlying discounting is in Q3, and maybe what that suggests for next year? Thank you.
Look, I think on the reinvestment, obviously, I think it depends also a bit where you stand with the interest rate. I think we had in Q3 particularly, you know, we were able to benefit from higher interest rates, but also we had more investments into fixed income in Q3 than you would see in a normal quarter on average. That's why it's probably a bit higher. But look, I think you see it, and that the average, I mean, the recurring income is increasing now steadily. But, yeah, you wouldn't see too large of a jump here, quarter-over-quarter here. Then I think on the discounting, you know, the average discounting should be in the 9% range. That's what you would see, and that's also in line with guidance. So that's where you should expect us to land.
Thank you. Kamran, could we have the next question, please?
The next question comes from Will Hardcastle from UBS. Please go ahead.
Hi there. Thanks very much. I guess the first one is just thinking about a sustainable run rate on PYD in the medium term. It'd be useful to know if this year's release has benefited from any particularly large one-off items favorably, such as perhaps some prudent cat release upon settlement. You did mention some short-tail reserves, and I'm trying to understand if that's sustainable, recognizing, I do fully recognize, you've taken some additional prudency as well. The second one, I think it's actually just linked with that last answer you gave. Just trying to understand whether, I think you're suggesting that essentially you've taken a bit more additional risk on the investments in the previous two quarters. And has that weighed at all on the SST as well? Is that perhaps some of the small miss to SST that maybe has come through there? That was really the question.
Thanks.
Yeah, so on the PYD, you know, and the question about, you know, reserve releases, what you should expect. I mean, I think we mentioned before that for this year, and also that what went into our targets, we assumed mid-triple-digit reserve releases. We will update you in December what you should then also expect going forward, and basically will also be part of 2027. So, with that, maybe if you can wait until then. But I think for this year, clearly we said that the mid-triple-digit, that is what you can expect in a normal kind of, under normal circumstances. On the investment side, the answer is actually no. We do not change the SAA. We have not changed the SAA, so this is more kind of temporary where you reinvest, but it was not driven by call it a re-risking or so.
It is basically stayed within our ranges that we had before.
Thank you, Will. Could we have the next question, please?
The next question comes from Andrew Baker from Goldman Sachs. Please go ahead.
Hi. Thank you for taking my questions. First one, just on the P&C Re gross insurance revenue. I guess if I look at your year-to-date P&C renewals this year, I guess through the mid-year, it was broadly flat. Last year was +3. Obviously, your gross insurance revenue down 9%, which includes some FX benefit through nine months. I know that you've called out some of it as cedent volume true-ups, but does this explain the whole difference, or are there any other multi-year impacts that could be impacting this line? I guess what I'm really trying to get to is, as we think about the insurance revenue growth next year, will it be more aligned to renewal updates, or is there an additional structural drag on the revenue side that we should be aware of?
Secondly, just on the Life & Health Re ISR, it looked like there was a negative experience variance in the quarter. Just curious what drove that. Thank you.
Look, I think on the insurance revenue development, I mean, the key drivers, as I said before, is clearly the renewals. I mean, that's by far the biggest impact. You mentioned FX. FX was actually neutral for the quarter, but it was positive for the nine months. Then we had the usual cedent volume updates, and that also had a negative impact, particularly in the beginning of the year. So that's a confirmation of what we already discussed before. On Life & Health, if you look at the experience variance, first of all, very positive for the year. As you mentioned, very small negatives for Q3. We actually had positive claims experience throughout the book. Then, as always in Q3, basically went into assumption updates. We had very small assumption updates that offset some of these positives.
But I would say call it neutral for the quarter and very positive for the full year. So that's our view on Life & Health Re. So nothing problematic there.
Thank you, Andrew. Could we have the next question, please?
The next question comes from Vinit Malhotra from Mediobanca. Please go ahead.
Yes, thank you very much. Good afternoon. My two questions are. The first one is maybe more a follow-up, and I apologize. I didn't capture all the numbers, but if I just focus on P&C Re experience variance of around $300 million in Q3 standalone, that's just the difference between the budget and the nat cat. Apart from that, there was discounting, which was a bit higher. There was manmade, which was a bit higher. There was a reserve number, I think you mentioned $350 million. I'm just curious if you could help me bridge the $300 million to all these variables, if possible, on the P&C Re side, please. Second one is, again, a very minor detail maybe, but the RA parameter adjustment in Q3 this year, $34 million, is quite much lower than the last two Q3s, which were $138 million-$170 million range.
I'm just curious whether there is a reason for having a lower adjustment. Is this number something we should always anticipate, or what's driving that number, please? Thank you.
Okay. Let me start on the P&C Re side with the Q3 experience, and I am focusing solely on Q3. As you mentioned, overall experience variance, $300 million positive. If I just take the current service, I separate between current service and past service, or current year or previous years. Nat cat, positive $300 for the year. We had some late reported IBNRs of around 100 negative. That is what I mentioned. Manmade and some smaller mid-size, 250. That brings you to minus 50 for the current year, as I mentioned in the prepared remarks. Then for past service, it was positive around 350, as I mentioned as well. That really then, you have the positives from the short-tail businesses, as we also talked about in Q2. Continuation of that, call it around 450, something like that.
Then a small negative from long-tail lines of about 100, which brings you then to 350 for the past service, in totality to 300 for the quarter. So that is very detailed on this one. On the risk adjustment, and I think you talk about risk adjustment for the P&C Re business. I mean, it can be a bit different year over year, but let me just look at it. As you mentioned, it was a bit higher last time, so there is no systematic kind of up or down here. I think it is just a bit volatile here, also because it is interest rate dependent. By that, it can be a bit lower this year and a bit higher that year. So nothing systematic there.
Thank you, Vinit. Could we have the next question, please?
Next question comes from Iain Pearce from BNP Paribas. Please go ahead.
Hi. Thank you for taking my questions. I just wanted to follow up on the insurance revenue topic, because I feel that there must be some other stuff in there. Could you just give us a sort of detail of how much impact the true-ups had, particularly in Q3 standalone, or if that, and sort of when you get the true-ups, and if you expect that to continue to be something that could recur into Q4 or even into 2027. And same if there was any number you can give around multi-year impacts on the insurance revenue versus the renewals, because the difference does look quite big to be just the true-ups. The second one was just on the U.S. mortality tailwind that you flagged in the Life & Health results.
Could you just give us some details on sort of what you've seen, if there's been any assumption updates on U.S. mortality from any favorable experience you've had there? Thank you.
So maybe I start with U.S. mortality and hand over to Thomas on the insurance revenue topic. U.S. mortality, we saw very positive claims development. No assumption updates there. It's really positive claims development, and particularly on the large claims. So we had much more positive development there. Remember last year, we had a couple of quarters with very high large claims. This also shows a bit the volatile nature of that business. But there was no underlying trend change. We're very happy that it's positive and no assumption updates there.
Yeah, so I think on the revenues, Anders already mentioned beginning of the year, we had effects of some of those cedent updates. Q3 is pretty clean, so the Q3 increase versus Q2 is entirely driven by the higher expected nat cat claims that you have, and there's no additional factor. If you do a year-on-year Q3 comparison, that reflects the casualty pruning that was undertaken in last year's June, July renewals, and then also some of the property price declines. If you compare it to renewal reporting, then in the renewals this year, we did have quite some multi-year deals as well, which can skew renewal reporting in any given one year. But the progress Q3 versus Q2 and also Q3 versus last year Q3, there's no additional new factors. So overall, the revenue in Q3 should not be in that sense a surprise.
Could we have the next question, please?
The next question comes from Ben Cohen from RBC. Please go ahead.
Oh, hi there. Good afternoon. Thanks for taking my questions. I just wanted to get a bit of clarification on the attritional loss ratio. I realize there are a lot of adjustments to be made in terms of large losses and the other things, but it looks like that if not an improvement year-over-year, that actually an ex-cat loss ratio actually improved or was at least stable. Given what we've seen from a pricing point of view, I just wonder if there are other material things going on with the book that you would point us to, or indeed maybe you could make some comment about the pricing impact there.
My second question was just on the Life & Health side. I imagine you will say more about the longer-term outlook in December, but I think you did make some management changes earlier in the year on that side. I just wondered if you could remind us in terms of where you see your priorities, particularly as you were saying that you're a bit less keen still on the Asian markets, but in terms of where you're looking to grow and maybe how some of those initiatives are coming along under the surface. Thank you.
Okay, shall we start with Life & Health? Andreas, you have a few words there.
Yeah, I mean, the management changes that we communicated, it is obviously the CEO of the business unit with Velina Peneva, who was a Group Chief Investment Officer before. This is basically focusing also on a strategic redirection and looking at attractive opportunities in the Life & Health space. We have got a very strong in-force book, but in particular on the transaction side, we strengthened the muscle. We also hired Eddie Carrigan also for the transaction side that was also communicated in August. Overall, I think a strengthening of the business unit, that it plays the role that it should play in our concert of the three business units, the stabilizing effect coming from there. But we expect, as Anders also said, that with the transactions uptick going forward and further professionalization of this unit, the new business CSM will definitely see also positive momentum.
We are looking forward to it, and we want to keep the strong position in the market, not only in the in-force book, but also on the transaction side.
Yeah, then just back to your question about attritional losses. Look, I do not think we see material change in the attritional losses year over year. I would say the best way, I think, to almost to look at the business is always when you normalize and you take out the experience variance out of the actuals. That is where you actually then see, in a way, a very stable environment with slightly deteriorating, basically in line with the new business CSM. The attritional, I would say they were, in my view, they were pretty much where you would then expect them to be. Nothing to highlight there.
Thank you, Ben. Are there any further questions?
At the moment, we have no more questions from the phone.
Thank you all for attending this call, for your interest. Should you have any follow-up questions, please do not hesitate to get in touch with any member of the IR team. Thank you again, and have a nice rest of the day.
Thank you all for your participation. You may now disconnect.