Ladies and gentlemen, welcome to the First Quarter 2021 Media Conference Call. I am Alice, the Chorus Call operator. Would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a Q and A session. The conference must now be recorded for publication or broadcast.
At this time, it's my pleasure to hand over to Elena Logotankova, Head, Media Relations and Corporate Reporting. Please go ahead, madam.
Good morning, everyone, and welcome to C3's 1st quarter results media call. I'm Ella Lobotenko, Head of Media Relations and Corporate Reporting, and I'm joined today by our group CFO, John Daisy, who will give you a brief overview of our key financial results and then we'll take your questions. John, over to you.
Thank you, Elena. Good morning from my side and thank all of you for joining the call this morning. As usual, I will briefly I'll walk you through the highlights of the results. Our businesses delivered strong underlying performance in the Q1, Effectively absorbing the impacts from COVID-nineteen and the larger than expected natural catastrophe loss. In fact, On an underlying basis, and so excluding the COVID related impacts, we achieved the strongest first quarter results since 2016, With a net income of $843,000,000 In terms of the COVID-nineteen impact, P&C Re and Corporate Solutions So losses declined sharply in line with our expectations, while we continue to see significant impacts in our life and health businesses In line with the tragic death toll from the pandemic.
As you know, the number of deaths related to COVID-nineteen peaked in many countries at the beginning of this year. For example, in the United States, the 7 day average daily COVID deaths stood at more than 3,000 in January February. This has declined to about 700 as the end of last week. Thanks to our diversified business model, we effectively absorbed the heightened mortality impacts Strong return on investments of 3.5 percent in the Q1, driven largely by recurring income and supplemented by gains from equity valuations. As a result, the group reported a U.
S. GAAP net income of $333,000,000 in the Q1. This was after reserving 4.20 $6,000,000 of large natural catastrophe losses, mainly from U. S. Winter storms in February and underpins the ability of our property and casualty businesses to generate Strong earnings while fulfilling our role as a shock absorber for the industry and for society.
Now let's have a quick look Some of our individual businesses. P and C Reinsurance delivered an excellent performance in the Q1 as a result of continued price improvements And disciplined underwriting. The business absorbed large natural catastrophe losses, primarily in the U. S. Again of $316,000,000 and reported a U.
S. GAAP net income of $477,000,000 in the quarter. Our strong focus on portfolio quality is driving profitability improvements with P and C achieving an annualized return on of 21.6 percent and a combined ratio of 96.5%. On a normalized basis, P&C Re is on track to reach the combined ratio estimate of less than 95% for the year. After our tactical adjustments and the January renewals, we are very pleased with the April renewals.
P&C Re achieved a 20% increase in the volume of treaty contracts versus the business that was up for renewal in April, Driven by attractive transaction opportunities. The nominal price increase of 4% more than offset the lower interest rates And the higher loss assumptions that were baked into this renewal. Life and Health Reinsurance continued to see Significant COVID-nineteen related losses of $570,000,000 and reported a U. S. GAAP net loss of $184,000,000 in the 1st quarter.
As I mentioned before, this is primarily driven by the heightened mortality rates in the U. S. And other Western countries in the Q1. On an underlying basis, Life and Health Re maintained its strong performance with further improvements in the quality of its earnings. Excluding COVID-nineteen, the business achieved a net income of $270,000,000 and an ROE of 16.8% Due to strong underwriting performance across all regions as well as favorable investment results.
Corporate Solutions maintains its positive momentum following the successful turnaround in 2020. For the Q1, the business unit reported a net income of 96 The result benefited from disciplined underwriting, strict expense management as well as continued rate increases. The strong pricing momentum we experienced in 2020 continued in the Q1 and the business unit achieved a risk adjusted rate increase of 13%. Despite higher than expected natural catastrophe losses, which amounted to $110,000,000 for the quarter, Corporate Solutions combined ratio was 96%. On a normalized basis, the business unit Is on track again to target to reach its target combined ratio of less than 97 in 2021.
Finally, let me give you a quick update on our digital white labeling platform, IptiQ. Following the disbandment of the Life Capital Business Unit, IptiQ is now operating as a stand alone division with its results reported as part of group items. In the Q1, IptiQ continued its Strong growth trajectory and reported 150% increase in growth premiums written for the core business as it expanded its property and casualty business In the EMEA region. To sum up, we had a strong Q1 demonstrating the significant earnings potential of our diversified business model. We're particularly encouraged by the improving profitability trends in our property and casualty businesses, supported by the focus on portfolio quality And with that, I'd like to hand it back to Elena for the Q and A.
Thank you, John. We'll now open the lines for questions. Operator, could we take the first question, please?
The first question comes from the line of Tom Sims with Reuters. Please go ahead.
Good morning. It's striking that almost all of the COVID related impact in the Q1 was Debt related, if I read correctly, the $585,000,000 in the Q1 compares with $912,000,000,000 for all of last year. So my question is, is the Q1 going to be the peak? Or are trends in places like India or elsewhere suggesting it may not be?
So Tom, thanks for the question. To answer your question, I think it's important to remember that Swiss Re's economic exposure with respect to It is dominated by exposures in Western countries broadly and in the United States specifically. And so the vast majority of these losses for the entire pandemic have come from the United States with Some losses from the U. K. And other countries, but at a much smaller rate.
We have small exposures, truly small exposures in emerging markets like India, Almost nothing in Latin America. So to your specific question, yes, the losses in the Q1 of 2021 We're very significant for mortality. That's consistent with it being the worst quarter For mortality deaths related to COVID in the United States and in the United Kingdom. We would expect our Economic losses based on what we know today to improve considerably in future quarters, Thanks to the aggressive rollout of vaccines in those two markets. We've seen the death rates drop, as I mentioned, From more than 3,000 per day in the United States identified COVID losses To under 1,000 probably now under 700 per day here at the end of April.
So I think We believe with our portfolio, this has in fact peaked. The vaccines Are having their impact of bending the curve with related deaths aggressively down. And as a result, while the losses won't go to 0 for us, they will be significantly below where they were here in the Q1.
Thank you. Thanks, Tom. Let's take the next question, please.
The next question comes from the line of Ben Dizon with S&P Global Markets Intelligence. Please go ahead.
Hi, good morning. Just a quick one really On the coronavirus loss numbers in the table at the bottom, there's a couple of negative figures in there this time around. So Minus 7 for Corporate Solutions and Event Cancellation and minus 4 in Credit Insurity for P&C Re. And is that basically So were you releasing reserves there? And could you say a little bit about why you feel comfortable to do so?
Sure, Ben. So on every quarter, we've got an elaborate process that's been Put in place precisely for the COVID losses to try to evaluate exactly what our losses Have been for the quarter as well as some indications of what we expect coming forward. On the event cancellation, as you say, it was a release $7,000,000 for credit insurance and P and C Reinsurance of $4,000,000 What I can Suggest is that we booked reserves in the 4th quarter based on what we understood to be A loss that on the events that did not occur because of the pandemic, The total cost of those events has been mitigated by the event organizers Spending less money. And so while we might have put up the initial reserve on our total exposure, for example, the Actual claim came in lower than that. And so that's where you see these modest adjustments.
In general, The overall exposure that we've got in both our P&C Re Business and Corporate Solutions A fraction of what we had a year ago, in part because of the restrictions we put on the policies that exclude The kinds of infectious diseases like COVID on a going forward basis and whether it was in the January 1 renewals or Even renewal was done during the course of last year, it's reduced our exposure to these risks independent of The path of the pandemic going forward. Okay. Thank you very much.
Thank you, Ben. Let's take the next question, please.
There are no more questions at this time.
All right. Thank you very much all for joining us this morning. And if you have any further questions, do let us know.
Sorry to interrupt.
We have
a last minute registration from Richard Dalton with Insurance Insider. Please go ahead.
All right. Okay. Hi, thanks for taking my question. You noted quite a big expansion in top line at the April renewals. I wondered if you could just give us a little bit more
Sure, Rachel. Happy to. The number It did increase materially 20% on what was up for renewal. A couple of thoughts. First, the April renewals Our smaller in absolute size, considerably smaller than what we would have done in January.
So this is a This is not the same impact on the overall portfolio. What we included in these renewals is on treaties where we've Had in this specific case, transactions with a Individual client with a substantially increased dimension of cover. And so these transactions sometimes are chunky, sometimes they fit into the renewals, sometimes they're independent of the renewals. In this case, it Part of the April renewal, and that's what drove the majority of this major increase along the way. What I can say is with that increase, compared to the decrease that we reported on January 1, where we made the tactical Took the tactical actions of reducing, again, our U.
S. Casualty exposure as well as Some property covers with respect to aggregates and lower attachments In some of our excess of loss treaties, this plus 20% And April brings us on a year to date basis at minus 3% overall for the renewals That compares to the minus 11 that we had on January 1. So we tried to explain to people that we did not Expect to continue a major shrinkage for the year and in fact the April renewals reiterates the fact that we Do see opportunities for growth. For the Q1, the premiums earned actually were up 6.5% at the group level for P&C Re, A little more than 5% because of the strong growth that we had in 2020, earning through in the 1st part of 2021 as well. So I think we just saw interesting prices and ability to work On these transactions with specific clients and took advantage to book The premiums as part of that renewal.
Okay, great. That's helpful. Thank you. And just to clarify, what kind of geography were you talking about at Bonfer? Can you give us a rough
So the January sorry, the April 1 renewals Are typically dominated by Japan, where our major Japanese clients. In this case, there's also some Business renewed in the United States as well with a couple of clients.
Great. Okay. Thank you. Thanks, Rachel.
Do you
have any further questions?
Yes, I will. Thank
you all for your participation and enjoy the rest of your day and your weekend.
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