Swiss Re reported a successful first half of 2006 with net income of CHF 1.566 billion ($1.27 billion), a 16 percent increase compared to a strong first half of 2005. Annualized return on equity was 13.9 percent and shareholders’ equity increased 18 percent to CHF 27.1 billion ($22 billion).
CEO Jacques Aigrain commented: “We are pleased with our first half results as they underline our progress towards sustainable business performance. Swiss Re’s diversification and continued focus on sound technical results, along with the transfer of peak risks to the capital markets, have clearly reinforced the quality and sustainability of our earnings.”
Total premiums earned rose to CHF 13.8 billion ($11.2 billion) in the first half of 2006 compared to CHF 13.2 billion $10.7 billion) a year earlier, “benefiting from higher foreign exchange rates and the first three weeks of revenues from the Insurance Solutions acquisition which closed 9 June 2006.”
Net investment income was CHF 2.8 billion ($2.27 billion), compared with CHF 2.5 billion ($2.03 billion) in the first half of 2005: a 13 percent increase with a return on investments of 5.3 percent. “Returns benefited from investment in higher yielding bonds as interest rates rose, and growth in the overall portfolio, said the bulletin.
Swiss Re said its P/C operating income rose 51 percent to CHF 1.9 billion ($1.54 billion) from CHF 1.3 billion ($1.05 billion), due to “attractive pricing conditions and Swiss Re’s continued focus on underwriting quality. Comparing the two periods, the combined ratio for traditional business improved from 96.3 percent to 93.0 percent with no adverse developments from prior years. Overall, premiums were down slightly at CHF 7.8 billion [$6.33 billion], reflecting higher client retentions.”
In its forecast for the rest of the year, Swiss Re said it “expects to achieve its over the cycle targets of 10 percent per annum earnings per share growth and 13 percent return on equity, based on the quality of the underlying business across all segments. Rates for the catastrophe-exposed property and specialty reinsurance business have risen substantially due to limited market capacity while other property and casualty reinsurance markets are expected to remain stable at profitable levels. In Life & Health, opportunities remain strong across all key markets, particularly in selected health lines. Swiss Re is well placed as the most diversified global reinsurer in the world to capture the benefits of all of these favorable market conditions.”
The earnings bulletin also noted that the “successful integration of Insurance Solutions and the streamlining of the organization currently underway will further drive Swiss Re’s economic profit growth. The first successes of the combined operations were seen with the July property and casualty renewals, which saw growth in the Swiss Re book and high retention of the Insurance Solutions portfolio. The bottom line will see the first positive impact from cost synergies in 2007 with the full benefits to be realized in 2008.”
The full report and additional comments may be obtained on the Group’s Website at www.swissre.com.
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