๐๐ฎ๐ฟ๐ฟ๐ ๐ง๐ฟ๐ฎ๐ฑ๐ฒ ๐จ๐ป๐๐ถ๐ป๐ฑ ๐ข๐ฝ๐ฒ๐ป๐ ๐จ๐ฝ ๐๐๐๐ถ๐ป๐ด ๐ช๐ถ๐ป๐ฑ๐ผ๐
Recently, we witnessed a surge in market volatility and a widespread sell-off across various sectors, driven by the Bank of Japan's shift towards a more hawkish monetary policy.
When such events occur and the market responds broadly, equity values often decline across the board, presenting prime opportunities to reinforce certain positions.
One such opportunity for me was with $GM (General Motors Co), which dropped below $40 USD (I'll elaborate on my perspective on GM in another post), and another was one of my favorite CHF dividend positions: $SREN.ZU (Swiss Re AG)
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Swiss Re, a global leader in reinsurance, continues every quarter to demonstrate its market strength through strong financial results and disciplined risk management. The company operates in three main segments:
- Property & Casualty (P&C) Reinsurance
- Life & Health (L&H) Reinsurance
- Corporate Solutions
Enhanced Investment Case for Swiss Re: Q1 2024 Performance
Swiss Re, a global leader in reinsurance, continues to demonstrate its market strength through strong financial results and disciplined risk management. The company operates in three main segmentsโProperty & Casualty (P&C) Reinsurance, Life & Health (L&H) Reinsurance, and Corporate Solutionsโserving clients worldwide with a broad portfolio of risk management solutions. Swiss Reโs Q1 2024 performance reflects its robust market position and operational resilience.
Q1 2024 Financial Highlights
- Net Income: USD 1,092 million
- Gross Insurance Revenue: USD 11,676 million
- Insurance Service Result: USD 1,352 million
- Return on Equity (RoE): 21.3% (annualized)
- Return on Investments (RoI): 4.0% (annualized)
- Recurring Income Yield: 3.9% (annualized)
- Shareholders' Equity: USD 21,140 million
- Book Value per Share: USD 72.79
๐ช๐ต๐ฒ๐ป ๐ฒ๐๐ฎ๐น๐๐ฎ๐๐ถ๐ป๐ด ๐ฎ๐ป ๐๐ป๐๐๐ฟ๐ฎ๐ป๐ฐ๐ฒ ๐ฐ๐ผ๐บ๐ฝ๐ฎ๐ป๐ ๐ถ๐ ๐ถ๐บ๐ฝ๐ผ๐ฟ๐๐ฎ๐ป๐ ๐๐ผ ๐น๐ผ๐ผ๐ธ ๐ฎ๐:
1. Combined Ratio (P&C Reinsurance: 84.7%, Corporate Solutions: 89.9%)
What It Means: The combined ratio measures the efficiency of an insurerโs underwriting activities. A ratio below 100% indicates that the company is generating an underwriting profit (i.e., premiums collected exceed claims and expenses).
2. Return on Equity (21.3%)
What It Means: RoE is a critical profitability metric, reflecting how effectively a company uses shareholdersโ equity to generate profits. A higher RoE indicates efficient capital use. - A 21.3% RoE is significantly above the industry average
3. Return on Investments (4.0%) and Recurring Income Yield (3.9%)
What They Mean: These ratios reflect the returns generated by the companyโs investment portfolio. A high RoI supports profitability, while a stable recurring income yield suggests steady and predictable income from investments.
4. Insurance Service Result (USD 1,352 million for the Group)
What It Means: This metric shows the profitability of the insurance underwriting activity, excluding investment results. A strong insurance service result indicates that the core insurance operations are profitable even without relying on investment returns.
๐๐ฟ๐ผ๐๐๐ต ๐ฎ๐ป๐ฑ ๐๐๐๐๐ฟ๐ฒ ๐ฃ๐ฟ๐ผ๐๐ฝ๐ฒ๐ฐ๐๐
- Climate Change and Catastrophe Reinsurance Demand: Swiss Reโs focus on climate-related risks, including natural catastrophes, positions it to benefit from the increasing demand for reinsurance in the wake of more frequent and severe natural disasters. With its expertise in catastrophe modeling, Swiss Re is poised to capture a growing market share.
- Emerging Market Expansion: As insurance penetration rises in emerging economies like China, India, and Latin America, Swiss Re is strategically positioned to capitalize on these high-growth regions, diversifying its revenue base and reducing dependency on mature markets.
- Technological Innovation: Swiss Reโs investments in InsurTech and data analytics enhance its ability to underwrite risks more accurately, improving operational efficiency and potentially unlocking new growth areas such as cyber risk insurance.
๐๐ผ๐ป๐ฐ๐น๐๐๐ถ๐ผ๐ป
Swiss Reโs Q1 2024 performance reinforces its standing as one of the most profitable and well-managed reinsurance companies globally.
In addition to that,
- The CHF is a currency that is expected to continue and appreciate between 10 and 20% in the next 5yrs with respect to the eur.
- Great dividend
What do you think?
Have a great day.
Best,
Andres.
$EURCHF$SPX500$SLHN.ZU (Swiss Life Holding AG)... Show More
