Facts and figures

in CHFm 2018 2017
Gross premiums written 5'319.9
4'337.3
Net earned premiums 5'263.6
4'404.3
Overall technical result - Life & Non-life
incl. interest, after management expenses
90.6
69.5
Investment result
(excl. interest on techn. prov., before mgmt exp.)
13.4 29.4
Management expenses - investments
-23.5 -21.7
Profit for the year 133.4 128.0
       
Investments 2'412.3 2'549.6
Technical provisions (net) 8'502.7 4'247.4
Shareholder's equity *) 839.9 834.4

*before appropriation of available earnings

Management report

General overview
In 2018, NewRe’s top-line developed positively again and the company achieved strong financial results. Primarily driven by life business, premium volume rose from CHF 4.3bn in 2017 to CHF 5.3bn in 2018. At CHF 133.4m, NewRe’s overall 2018 result compares favourably to the previous year’s figure of CHF 128m. This solid result stems from profits in the natural catastrophe reinsurance business, the Weather segment and Life business.

Market conditions, competition, supply and demand
The non-life reinsurance market showed stable rates in the Casualty business in an overall soft market environment. In Property reinsurance, prices remained relatively soft across Europe; the rates for natural catastrophe exposed business reduced further. The main cause for these continued low price levels is a vast surplus of risk capital in the market

In Life reinsurance, business opportunities arose in the German market due to interest rate based reserving requirements (so-called “Zinszusatzreserve”) and generally due to solvency requirements for primary insurance clients. NewRe was able to benefit from this environment and several new life transactions have been written.

Staff
The total workforce of NewRe was 113 FTEs at the beginning and 117 FTEs at the end of 2018, with an average of 115 FTEs during the year.

A change in the composition of NewRe’s Board of Management became effective in September 2018. In the context of his upcoming retirement in 2019, Jean-Luc Bourgault stepped down from his position as a member of the Board of Management and Chief Underwriting Officer. Dr. Artur Klinger was appointed as his successor and took on his role effective 1 September 2018.

Innovation and development
In Non-life reinsurance, we continue to work with innovative start-up companies and virtual insurers. In Life reinsurance, our focus has been to support primary insurance companies in offering innovative products to their clients and to cover the risks associated with these new products.

Significant events
New Life reinsurance transactions have added a premium volume of roughly CHF 900m during 2018. Across all segments (including Life), gross premiums written grew to CHF 5.3bn, compared to CHF 4.3bn in 2017.

Non-life: The NewRe natural catastrophe reinsurance business experienced another year of relatively benign losses. With a bottom line impact of less than CHF 25m wildfire losses in the US formed the most severe losses in 2018.

Weather business: After a challenging year 2017, NewRe’s Weather derivatives business performed positively in 2018 and in line with its business plan.

Risk management
Due to the volatile nature of the reinsurance business, and the potential for significant losses, NewRe has a dedicated risk policy and maintains a tight risk management system. The features of this risk management system are explained in more detail in the respective section of this report.

All events and impacts experienced in 2018 were within the expected range.

Outlook
In NewRe’s Non-life reinsurance business, 1 January is the date on which a significant portion of the book is due for renewal. Despite the continuing soft market, the overall outcome of the 1 January 2019 business renewals was positive, primarily with respect to new business volume and, to a lesser degree, also with respect to price levels. While price levels were predominantly flat, NewRe received appropriate price increases on loss-affected business.

Life reinsurance is signed throughout the year and in light of NewRe’s positioning in the market and its growth strategy, further top and bottom line growth is expected.

All in all, the outlook for NewRe’s business in 2019 is favourable. However, the reinsurance business remains highly volatile by nature. The natural catastrophe reinsurance segment and the parametric Weather business particularly may be affected by large loss events and weather extremes. In addition, NewRe runs a tail risks in the Life segment with respect to market, mass lapse and mortality risks. Based on NewRe’s current capitalisation and growth expectations, future profits will be distributed as dividends to Munich Re.