Outgoing Swiss Re CEO Christian Mumenthaler’s time at the helm of the firm coincided with a drawn-out soft market phase for the reinsurance sector, before the flip-switch moment of 2023’s hard market high returns.
He will leave the firm in July, the company announced this morning, with Andreas Berger taking over, fresh from a turnaround of the firm’s Corporate Solutions (CorSo) division.
Swiss Re said the time for succession was right due to its recent group reorganisation and the meeting of all 2023 financial targets.
But looking back over key metrics that highlight Swiss Re’s past seven years underscore the painful challenges the firm has faced in that timeframe.
During his tenure, Mumenthaler put an emphasis on preparing for climate change and an energy transition during his tenure, alongside a revamp of insurance business CorSo. But the firm’s casualty reinsurance unit has been its weak point over the past six years, and the firm has struggled to get investors to value it as highly as its peers.
However, after the investment market challenges of 2022-2023 when it suffered some of the largest mark-to-market losses in the sector, it has gained ground against peers on some metrics.
1. Total shareholder return
Christian Mumenthaler took over as CEO of Swiss Re on 1 July 2016.
During his tenure to date, the company has recorded a cumulative total shareholder return of 113% - a better mark than Scor has managed (67%), but considerably short of those of Hannover Re (254%) and Munich Re (308%).
2. Price-to-book multiples
When Mumenthaler was appointed in mid 2016, Hannover Re was the only one of the four continentals which traded at a price-to-book multiple of more than 1x.
Swiss Re – along with Scor and Munich Re – was trading at around 0.8x book on the public markets at that point in time.
Over the almost-eight-year period since his appointment, each of these reinsurers has improved their valuation markedly. Swiss Re’s valuation has improved from a 0.8x multiple to a 2.3x multiple as at the end of March – now the second-best mark of any of the four, trailing only Hannover Re. Although it is flattered on this metric by the extreme mark-to-market losses it has faced, which artificially squeeze book value.
3. Group premium growth
In group GWP terms, Swiss Re is 1.4x as large a business as it was when Mumenthaler took over in mid 2016. The company reported GWP of $36bn in 2016. This had increased to $50bn by 2023.
Swiss Re has historically reported its financial statements under US GAAP, while peers Scor, Munich Re and Hannover Re have applied IFRS. With the adoption of IFRS 17 by IFRS reporters from 2023 onwards, company-to-company comparison has become more difficult, with GWP no longer a required disclosure.
However, both Munich Re and Scor have elected to continue reporting GWP as a non-GAAP performance measure. Their growth in relative terms between 2016 and 2023 has been roughly equal to Swiss Re’s. Munich’s 2023 GWP was 43% higher than its 2016 figure, while Scor’s was 40% higher.
Hannover Re elected not to disclose GWP as a non-GAAP performance measure in 2023; however, between 2016 and 2022, it grew much more in relative terms (103%) than the other continentals, off a smaller base.
4. Group underwriting performance
The first full year of Mumenthaler’s tenure was 2017. Swiss Re recorded a group combined ratio (CoR) of 115% in that financial period, during which cat reinsurers were stricken by the impact of three major hurricanes.
Active disaster loss years continued to plague the cat segment over coming years. The company posted group underwriting losses in each of the next three years too. Between 2018 and 2020, it reported CoRs of 107%, 111% and 110%.
The company has made an underwriting profit in two of the last three years – with CoRs of 96% in 2021 and 94% in 2023 – but made a further loss in 2022, with a CoR of 101%.
5. Segmental performance
When Mumenthaler took over as CEO during 2016, its CorSo segment was in the middle of a loss-making year, recording an annual CoR of 101%.
In addition, it reported a CoR above 100% in each of the four following years – peaking at 133% in 2017 – before turning an underwriting profit in each of the last three years, with annual CoRs of 91%, 93% and 92% since 2021.
Over this period, the CorSo segment has also almost doubled in size from $4.2bn of GWP in 2016 to $8.2bn in 2023.
In contrast, the P&C Reinsurance segment grew its GWP by only 34% during Mumenthaler’s tenure to $24bn. It also recorded four consecutive years of underwriting losses between 2017 and 2020, but has recorded a CoR of below 100% in two of the last three years.
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