Swiss Re reported strong 2012 results with net income for the year of $4.2 billion for full-year 2012, compared to $2.6 billion in 2011. The report said the “result was driven by strong premium and fee income growth of 15 percent from $22.2 billion in 2011 to $25.4 billion in 2012 and by favorable prior year development in the P&C businesses.”
Other highlights included the following:
• Board of Directors to propose an increase in regular dividend to CHF 3.50 [$3.76] per share and an additional special dividend of CHF 4.00 [$4.29] per share
• Strong underwriting performance in P&C Re and Corporate Solutions, Group combined ratio of 83.1 percent
• Successful January P&C renewals; additional growth expected for 2013 from expiry of quota share retrocession
• All business segments contributing to the positive result, including excellent investment performance
Group CEO Michel M. Liès commented: “This result shows that our strategy is effective and that we remain well on our way to achieving our 2011—2015 financial targets. We have seen a particularly strong performance in our P&C Re business and our investment results were excellent. The underlying business performance of the Group was clearly very strong and the result included positive reserve development from prior year business and realized gains on investments. 2012 was the first full reporting year under our new corporate structure and all units have contributed positively to this very pleasing result.”
Swiss Re said “investment income was a very impressive $4.5 billion for the year, with a return on investments of 4.0 percent (vs. 4.4 percent). Investment-related net realized gains amounted to $1.5 billion in 2012.”
In its analysis of the combined ratio, Swiss Re said it was “significantly better than the projected 94 percent for 2012. This includes the unchanged claims estimate of $900 million from Hurricane Sandy as communicated at the end of November 2012. Adjusting for prior year reserve releases and slightly lower than expected natural catastrophe losses, the underlying combined ratio for the year was 91.1 percent.
“Measured over a longer period to remove some of the random volatility, the Group’s five-year average combined ratio has improved from 98.3 percent in 2007 to 95.4 percent in 2012. This underlines the strength of the Group’s portfolio of property and casualty risks.
“Earnings per share were $11.85 or CHF 11.13 (vs. $7.68 or CHF 6.79 in 2011). Shareholders’ equity rose by $4.4 billion to $34.0 billion. Book value per common share increased to $95.87 or CHF 87.76 at the end of December 2012, compared to $86.35 or CHF 80.74 at the end of 2011.”
Concerning property/casualty reinsurance, Swiss Re said net income for the sector “rose to $3.0 billion in 2012, an increase of $1.9 billion from 2011. This very strong result was due to the combination of a 21.6 percent increase in net premiums earned to $12.3 billion (vs. $10.1 billion), improving margins, favorable prior year reserve development and realized gains on investments. The result also includes the natural catastrophe loss from Hurricane Sandy.
The P&C Re combined ratio was 80.7 percent in 2012 (vs. 104.0 percent). Adjusted for expected natural catastrophes and prior year reserve releases, the combined ratio was 90.1 percent.”
The report also said the January “P&C treaty renewals were successful, allowing Swiss Re to achieve profitable growth of 11 percent while maintaining a high-quality portfolio. The portfolio saw price increases of 2 percent before taking into consideration the economic impact of lower interest rates. Including these, the risk-adjusted price quality of the portfolio was maintained at last year’s level. Growth was driven by demand for tailored solutions and solvency relief transactions in Europe and the Americas.”
In addition Swiss Re noted that the five-year 20 percent quota share agreement with Berkshire Hathaway expired in December 2012. The report said “this effect alone is expected to lead to a significant increase in net premium income in our P&C Re and Corporate Solutions businesses for 2013.” The bulletin added that Swiss Re is on target to achieve its 2011-2015 financial targets.
Source: Swiss Re