After Swiss Re announced a net income target of $4.5 billion for 2026, which left some analysts underwhelmed, the reinsurer’s Group Chief Executive Officer (CEO), Andreas Berger, underlined the importance of growing at the right time and avoiding temptation.
In light of this, during the recently held Management Dialogue with analysts, CEO Berger emphasised that markets are tough, although added that the outlook is positive with a focus on strength and resilience at Swiss Re.
Berger’s opening remarks focused on temptations in the current market landscape, specifically the temptation for growth.
“At the moment, everybody thinks we have to grow. There’s so many opportunities, there’s so much demand in the market, so let’s go and grow. In our business, sorry to say, it’s a recipe for disaster. I have lived through many, many cycles… the characteristics are always the same. People go into markets, grow at the wrong time, I’ve seen this movie before… So, we have to be very conscious about this,” he said.
The CEO went on to stress that he’s “not here to squeeze the lemon” but rather “to build a lemon tree.”
“It’s not about squeezing the lemon. It’s about long-term stability, resilience, it’s about delivering year by year by year by year, consistency. And you won’t achieve that if one gets too excited, if people think there’s an opportunity there that we need to chase.
“But on the other hand, I’m also not intimidated by what people say about markets and rate developments. That is cycle management. That’s normal. So, we have to grow up and behave in the right way in each and every part of the cycle. That’s our job,” added Berger.
The CEO reiterated numerous times that the $4.5 billion is a good and attractive number in the current market environment as it translates to a roughly 20% return on equity (ROE).
“So, this is a pretty good outcome. Could we do more? Maybe. But again, remember, I don’t want to squeeze the lemon. We need some dry powder for further strengthening our position in the market,” said Berger.
Later adding: “I think this is what we want to say, that we, through the cycle, want to generate more than 14% ROE, because there could be parts in the business in the cycle that will not generate the 20%, the history is telling you this.
“So, what we’re trying to do is to manage expectations also, and also give us the optionality, the room, to really deliver on what we said we would do on a consistent basis. So, $4.5bn is good, in particular when you take the P&C businesses that are under pressure, as we have a pretty large part of the P&C in our book, and that needs to be managed. I’m not saying that I’m pessimistic about it, I’m not intimidated, but we need to manage it actively.”
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