Zurich (Reuters) - Reinsurance group Swiss Re is aiming to multiply its profit this year.

Thanks to attractive market conditions, the expected decline in Covid claims and higher interest rates, it should generate a profit of over three billion dollars in 2023, Swiss Re announced on Friday. Last year, natural catastrophes such as Hurricane Ian and costs in connection with the coronavirus pandemic depressed profits to 472 million dollars. Swiss Re also blamed inflation and the fall in the value of equity investments for the decline. Nevertheless, this was slightly more than analysts had expected. In 2021, also characterized by high catastrophe costs, the world's second-largest reinsurer had still posted a net result of 1.44 billion dollars.

"2023 has started well, and the successful renewals in January confirm our ambition to increase profitability and create value for shareholders while continuing to support our clients," explained Group CEO Christian Mumenthaler. In the January treaty renewals, Swiss Re achieved price increases of 18 percent. In contrast to number three Hannover Re, the Swiss company also expanded its business. Global market leader Munich Re will present its annual financial statements on Thursday.

Swiss Re also confirmed its medium-term targets. The Zurich-based company is aiming for a return on equity (ROE) of 14 percent by 2024. In 2022 it was only 2.6 percent. Due to the billions in expenses for the damage caused by "Ian", Swiss Re overturned its 2022 profitability target of ten percent in October.

The major losses in connection with natural disasters cost Swiss Re a total of 2.7 billion dollars. In addition to Ian, floods in Australia and South Africa, hailstorms in France and winter storms in Europe and the USA also had an impact. It is still too early to estimate the damage caused by the earthquake in Turkey and Syria, explained Mumenthaler. However, a large proportion is unlikely to be covered. "Insurance penetration in these regions is very low." Worldwide, there is a gap of at least 50 percent between economic losses and insured losses. "In these regions, it's even more." Experts specializing in natural disasters recently estimated the economic damage caused by the earthquake in Turkey and Syria at more than 20 billion dollars. However, only a fraction of this - just over one billion dollars - is insured, according to an initial estimate by US company Verisk Analytics.

Despite the decline in profit, the dividend is to remain virtually unchanged. Thanks to its strong balance sheet, Swiss Re intends to distribute a dividend of 6.40 dollars (most recently 5.90 francs) per share to owners for 2022. Swiss Re was little changed on the stock exchange. The annual result was slightly better than feared, explained Michael Kunz, analyst at Luzerner Kantonalbank. "Due to the high volatility of the business, we are traditionally rather skeptical about reinsurance." However, the high and stable dividend is attractive.

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