Swiss Re’ Expects $74 Million 2002 Loss; January Renewal Rates up 10%

February 26, 2003

Swiss Re indicated that it expects to post a net loss in the CHF 100 million ($73.7 million) range for the year 2002, due primarily to weakness in global equity markets, but the company also announced that the January renewal season had been very successful, with premium rates increasing by an average of around 10 percent.

The decline in value in the world’s capital markets “led to impairment charges of CHF 3.4 [$2.5 billion] billion in 2002,” said Swiss Re. “The total return on investment for 2002 is expected to be in the range of CHF 5 billion [$3.7 billion] or 4.7%, below the 2002 target of 6.7%. 2001’s return on investment result was CHF 8.4 billion [$6.2 billion] or 8%. However, 2002 was the third consecutive year of falling stock markets, with the second half of the year seeing a particularly sharp downturn.” The company posted realized gains in 2002 of CHF 3.1 billion [$2.29 billion], against CHF 3.4 billion [$2.5 billion] in 2001, “resulting from gains on equities and bonds, plus gains on equity hedges.”

CEO John Coomber commented, “2002’s decline in the capital markets created a large impairment charge and ultimately depressed this year’s result. Whilst this is disappointing, the underwriting improvements made during 2002 and built upon in this January’s renewals, underline the attractive outlook for our core businesses.”

Swiss Re also announced that its P/C Business Group (P&C) “achieved improvements in rates and terms & conditions across all lines of business. 67% of P&C’s traditional treaty business was renewed in January, with average rate increases of 10%. Swiss Re maintained its strategy of moving to non-proportional business, with 43% written on that basis during this renewal round.”

“Financial Services Business Group’s corporate risk underwriting completed 43% of their renewals between October 2002 and the end of January 2003, with an average rate increase on the renewed business of 16%. The credit and surety book renewed with a 5% increase in premiums while exposures were reduced by 13%, creating a strong increase in premiums relative to exposure.”

The bulletin indicated that the “key to achieving these continued improvements has been Swiss Re’s focus on underwriting quality. Efforts are concentrated on risk selection, rate adequacy and tightening coverage terms. Maintaining underwriting discipline will be vital in ensuring the benefits of the hard market are sustained and that clients, who are increasingly seeking Swiss Re’s high quality reinsurance capacity, can access it.”

The company will hold an analysts’ conference call today at 14.00 CET [8:00 a.m. EST], covering the topics outlined in its announcement in greater detail. The conference call can be followed by telephone on:
Europe: +41 91 610 5605
US: +1 412 380 7400

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