Swiss Re Ltd maintained its financial resilience in 2024, despite a decline in its solvency ratio driven by technical accounting changes and sector-specific challenges, according to its newly released 2024 Financial Condition Report.
The global reinsurance group reported a Swiss Solvency Test (SST) ratio of 257% for 2025, down from 269% the previous year. The decline reflects a one-off adjustment linked to Swiss Re’s shift from its internal Economic Value Management (EVM) framework to International Financial Reporting Standards (IFRS) for regulatory reporting purposes. This transition required revaluations that reduced the Group’s risk-bearing capital from US$43.7 billion to US$40.2 billion, despite a decrease in required target capital.
Swiss Re attributed the lower ratio primarily to “unfavourable underwriting contribution mainly from life and health reinsurance, and dividends,” though it acknowledged the offsetting effect of a robust investment result and solid performance in property and casualty reinsurance and corporate solutions.
“Swiss Re’s capital position remained strong,” the report noted, emphasizing that the group’s solvency position still comfortably exceeded regulatory minimums and internal targets. The SST ratio is calculated as risk-bearing capital divided by target capital, offering a measure of the firm’s ability to absorb shocks.
In terms of risk exposure, the group’s total calculated risk under SST dropped from US$20.2 billion to US$18.8 billion. The reduction was mainly driven by improved inflation expectations, which reduced the group’s property and casualty risk exposure. At the same time, financial market risk fell due to rising interest rates and enhanced credit hedging strategies.
Despite these developments, Swiss Re remains exposed to significant potential losses from extreme events. Its largest modeled exposure in the SST 2025 scenario was a US$6.1 billion loss from a major Atlantic hurricane, followed by a US$3.7 billion loss from a lethal pandemic event.
The company’s valuation of assets and liabilities also saw changes due to the IFRS transition, with total market-conform asset value falling from US$161 billion to US$143 billion. Corresponding liabilities dropped by US$15.1 billion, preserving a solid capital buffer.
Swiss Re’s approach to capital management includes the use of internal retrocession, insurance-linked securities, and derivative hedging instruments to protect its financial position. It also monitors various external risks, including operational and climate-related challenges, which are not explicitly captured in capital requirements but are managed actively within its enterprise risk framework.
As it enters the next fiscal period, the group continues to face uncertainty related to financial markets and global economic shifts. However, its diversified investment strategy and disciplined risk management support its outlook of sustained solvency and operational stability.
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