Swiss Re Posts $1.074 Billion 1st Half Net; Premiums Written Fall 4%

August 25, 2005

Swiss Re announced group net income of CHF 1.353 billion ($1.074 billion) for the first half of 2005, a 6 percent decline, compared to the CHF 1.441 billion ($1.144 billion) it earned in the same period of 2004.

The world’s second largest reinsurer indicated that its dedication to “underwriting profitability” was the principle reason for the decline. Net premiums decreased by 4 percent overall to CHF 13.2 billion ($10.48 billion), while the combined ratio for the P/C operations improved to 95.5 percent from 96.1 percent in the same period last year. Return on equity was 13 percent in line with the company’s target. The earnings bulletin noted that “shareholders’ equity grew 15 percent to CHF 22 billion [$17.5 billion], further strengthening Swiss Re’s financial position.”

Out going CEO John Coomber (See related article) commented: “Swiss Re further improved the profitability of its reinsurance operations. We have strengthened our capital position and, subject to a normal business development for the remainder of 2005, the Board of Directors will recommend an increased dividend of CHF 2.50 [$1.985] per share for the full year.”

Swiss Re’s bulletin stressed the progress the reinsurer has made in sustaining “operational profitability.” In the P/C group, even though the combined ratio improved, operating income fell substantially in the first half to CHF 1.1 billion [$873 million] from CHF 1.5 billion [$1.219 billion] in the same period of 2004, “due,” said the bulletin, “to lower realized capital gains.” Earned premiums for the period were CHF 6.757 billion [$5.36 billion] a 10 percent decrease (8 percent at constant exchange rates) from the CHF 7.527 billion [$5.973 billion] in 2004. Swiss Re said the decline reflected “the business group’s pricing discipline in a softening market environment.”

“The Life & Health Business Group’s profitability increased in the first half of 2005 as the return on operating revenues improved to 9.5 percent, exceeding the business group’s 9 percent target,” the announcement continued. “Operating income increased 37 percent at constant exchange rates to CHF 834 million [$662.6 million] in part due to higher realized capital gains. Premiums earned were CHF 5 billion [$3.97 billion] for first half 2005, an increase of 3 percent at constant exchange rates.”

Swiss Re’s Financial Service Business Group “contributed operating income of CHF 339 million [$269 million] for the first half 2005,” said the bulletin. “The premium business combined ratio was a satisfactory 94.9 percent. Premiums earned declined 8 percent at constant exchange rates to CHF 1.4 billion [$1.11 billion], reflecting Swiss Re’s selective underwriting approach.”

The full earnings announcement, commentaries and analysts’ presentation may be obtained on the company’s Website at: www.swissre.com.

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