Swiss Re announced that it “expects earnings for the year 2000 to be up slightly more than 20%,” and that “significant improvements” had been made in the recent reinsurance renewal period.
The company profited from unusually high returns on its investments, strong growth in the life reinsurance market, and the absence of major catastrophes during the year. It nevertheless plans to increase reserves for future catastrophe losses, while taking measures to reduce their impact.
“Swiss Re successfully negotiated significant improvements in reinsurance conditions and prices for the January 2001 non-life reinsurance renewal period,” said the announcement. “This renewal includes most of its business in the largest non-life markets: Europe, North America and parts of Asia. Business relationships not in line with the profit requirements were either re-underwritten, cut back or terminated. In addition Swiss Re has reduced its capacity (committed capital) for natural catastrophes by 10% with this renewal.”
The company expects new business and price increase to offset any business that has been cut back or terminated. It forecasts that the trend towards higher prices and better conditions will continue through 2002.
If so, it will help the huge global reinsurer to achieve a long sought goal. “Given this view and barring extraordinary or unusually high losses, Swiss Re is confident that a major target for 2001 is within reach: a combined ratio of 107%.”
The announcement also outlined plans to consolidate “its European non-life business under one organisation by merging Bavarian Re Division with Europe Division.” A new overall structure will unite Europe, the Americas and Asia into one “Non-Life Business Group” to be headed by Stefan Lippe, currently CEO of Bavarian Re.
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