Swiss Re’s Stance on California Wildfires
In a recent interview with CNBC, John Dacey, the Chief Financial Officer of Swiss Re, emphasized the company’s steadfast presence in California despite the ongoing challenges posed by wildfires in the region. Dacey clarified that Swiss Re is not planning to withdraw from California, underlining the company’s proficiency in accurately pricing risk and its commitment to supporting insurers in the region, akin to its operations in Florida’s private residential market.
When questioned about the potential retreat from California due to the Los Angeles wildfires, Dacey assured that Swiss Re remains committed to the state. The company plans to thoroughly assess the wildfire events, validate its loss models, and ensure these models are in harmony with the realities observed in California by January 2025.
Effective Risk Pricing
Dacey stated, “We believe we can effectively price this risk. Our aim is to support the primary insurance companies in California, similar to our support to insurers offering private residential insurance in Florida. It’s crucial for us that the pricing remains adequate.”
Expanding Coverage and Profitability
Addressing the possibility of expanding coverage due to ongoing profitability, Dacey noted that Swiss Re increased premiums by 7% during the January 1 renewals, encompassing various business levels except US liability, where pricing concerns persist for Swiss Re and the industry at large.
“In all property and natural catastrophe layers we currently operate, we find the pricing sufficient,” Dacey explained. “Although we increased prices by about 2.8% year on year, our loss costs rose more, approximately 4.2%. This results in some margin compression for us in 2025, yet we believe this sector remains profitable. Our P&C Re and Corporate Solutions divisions, our two main P&C businesses, showcase robust underlying earnings.”
Financial Performance and Loss Estimates
In 2024, Swiss Re reported a net income of $3.2 billion, a modest increase from 2023’s $3.1 billion, driven by disciplined underwriting despite a 9% decline in underwriting profit, maintaining a strong $4.3 billion. The company estimates the losses from the Los Angeles wildfires to be under $700 million, which Dacey confirmed accounts for more than a third of its 2025 natural catastrophe budget of €2 billion.
