Swiss Re, which acts as a backstop to the world’s insurers, is expecting another quarterly loss. It expects a $500mn net loss in the third quarter. Blame Hurricane Ian, which hit Florida at the end of September.

The Swiss reinsurer anticipates claims of $1.3bn from the storm. Hurricanes, while horribly destructive for people in their path, are in the normal course of business for insurers. Swiss Re shares are therefore trading at around SFr74, down less than both the Swiss market and other European insurers in the past six months.

The shares are not expensive, trading on a 2023 price-to-earnings multiple of under 7 times, less than rival Munich Re’s 9 times, according to Bloomberg data. Its Swiss solvency ratio of 274 per cent as of July suggests a strong capital position.

Reinsurers provide financial protection for insurers. Some are reducing their exposure to natural disasters. Not Swiss Re. Insurance will be needed no matter how deep the economic downturn. Swiss Re regards it as important for driving future profits growth. Cover prices are rising, supporting its earnings.

Swiss Re will benefit, too, from rising interest rates, which will help its investment income. Too bad that the market prices of many of these assets have slumped. The group can meanwhile expect a bounceback from its life and health division, hit by the tail-end of coronavirus in the first half of the year.

Reinsurers prove their worth when times are hard. Covid-19 should help Swiss Re over the long term as the disease’s spread has demonstrated the value of health insurance. Diseases and natural disasters are at least uncorrelated with economic woes.

Nevertheless, it acknowledges it is unlikely to meet its 2022 target of a 10 per cent return on equity given the impact from natural catastrophes. But that is the nature of the insurance business.

Swiss Re holds to its medium-term goal of achieving a 14 per cent return on equity in 2024. Investors should benefit from its robust qualities in recessionary times ahead.

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