Swiss Re Posts $960 Million Q2 Net Income; Combined Ratio 78.4%

August 4, 2011

Swiss Re reported Group net income increased by 18 percent to $960 million in the second quarter of 2011, compared to $812 million in the same period of 2010. “All segments contributed to these positive results, which translate into a return on equity of 15.6 percent,” said the earnings report. Shareholders’ equity increased to $24.8 billion

CEO Stefan Lippe commented: “The Group performance in the second quarter was strong. All segments – Property & Casualty, Life & Health and Asset Management – contributed to the result. Furthermore, Swiss Re’s future growth prospects have been underscored by our strong July 2011 renewals, during which we benefited from the gradual firming of pricing in Property & Casualty.”

The reinsurer’s Property & Casualty segment posted operating income of $993 million, compared to $455 million in 2010, along with a combined ratio of 78.4 percent, compared to 102.0 percent last year. “The increase in operating income was driven by disciplined underwriting, a favorable net development of prior accident years and lower large loss experience in the second quarter,” said the bulletin.

Premiums earned increased 12.6 percent (or 7.1 percent at constant foreign exchange rates), reflecting strong renewals and also new business written in the first half of 2011.

Swiss Re commented: “The “volatility of financial markets in the wake of recent sovereign debt issues in Europe remains a concern. After starting to take resolute steps from late 2009 to reduce sovereign debt exposure to non-AAA rated European government bonds, Swiss Re now holds only $78 million in sovereign debt issued by peripheral euro zone countries. “The company’s exposure to Greek sovereign debt is nil.”

Earnings were supported by “strong July 2011 renewals,” which evinced “improved market conditions and a firming price environment.” The renewals covered approximately 18 percent of Swiss Re’s Property & Casualty treaty book, and showed top-line growth of 8 percent. “Risk adjusted price adequacy for business renewed in July improved by 5 percentage points.”

Swiss Re explained that it “was able to increase volume and prices mainly as a result of higher demand for natural catastrophe cover in Australia, New Zealand and the United States. Swiss Re was also able to complete Property & Casualty run-off transactions at attractive rates, but remained defensive on Casualty business whenever prices did not meet the company’s requirements.”

Lippe noted that Swiss Re’s financial targets “are the company’s most important priority and Swiss Re is fully focused on achieving them.”

The bulletin also explained that the “ongoing volatility and the moderate nature of the global economic recovery, Swiss Re is seizing opportunities for growth in its chosen areas of focus. The company expects significant potential in emerging markets such as China, Brazil and Vietnam.

“China is already Swiss Re’s third-largest market (measured in gross premiums written during the first half of the year). Within 10 years, Swiss Re economists predict that China will be the world’s second-largest insurance market. Broader demographic developments relating to the ageing population of many countries also present an opportunity for reinsurance companies like Swiss Re. As a market leader in longevity, Swiss Re helps pension fund providers and insurance companies with the associated risks.”

The complete report and additional information may be obtained on the Company’s web site.

Source: Swiss Re

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