Swiss Re Reports $2.6 Billion 2011 Net Income Despite Nat Cats

By | February 23, 2012

Swiss Re reported net income of $2.6 billion for the full-year 2011, despite what it described as “an exceptional natural catastrophe burden” – a strong performance compared to the $863 million reported for 2010. Its combined ratio for the year was 101.6 percent, compared to 93.9 percent in 2010.

While operating income decreased in both the reinsurer’s P&C sector and Life & Health – $2.476 billion to $1.285 billion and $810 million to $464 billion, respectively – operating income from investments rose to 5.1 percent to $5.038 billion from $4.472 billion in 2010.

For the fourth quarter of 2011 Swiss Re reported group net income of $983 million, compared to a $725 million loss in Q4 2010, mainly due to an increase in asset management operating income to $1.286 billion from$1.134 billion in Q4 2010.

Operating income from the P&C sector in Q4 2011 decreased to $515 million from $673 million in the same period of 2010. The combined ratio for the period was 93.5 percent, higher than the 88.8 percent for Q4 2010. L&H operating income also declined to $14 million, compared to $304 million in Q4 2010.

Group CEO Michel M. Liès commented: “With a successful year behind us and a modest but broad market turn underway, Swiss Re is well positioned to perform and grow in a low yield environment. Our risk management has proven robust in 2011 with strong Group and P&C results, as well as the excellent performance of our Asset Management portfolio in challenging markets.

“This solid foundation, combined with unique growth opportunities, means that we are positioned well heading into 2012. We will further capture excellent opportunities in P&C Reinsurance and Corporate Solutions, while focusing on the profitable development of our L&H business, including high-growth markets.”

Swiss Re also said that its P&C treaty renewals “showed strong premium growth of 20 percent across all regions.” The report pointed to its “strong capital position,” as having given it the ability to “respond to increased client demand for natural catastrophe cover and for capital relief transactions, where prices were above the thresholds set.

“The average price increase for the renewed book was 4 percent and risk-adjusted price quality improved slightly to 108 percent. Swiss Re’s 2012 combined ratio is estimated at approximately 94 percent, assuming the burden of large claims is as expected. Compared to last year, the company anticipates that the combined ratio will increase slightly, due to the higher proportion of capital relief transactions in the portfolio.”

Swiss Re also forecast a future with increased “business opportunities offered in its core reinsurance and insurance activities, including the 25 percent growth opportunity offered by the expiry of the quota share agreement with Berkshire Hathaway at the end of 2012.

The bulletin said that while Swiss Re’s focus will “remain resolutely on traditional markets, the company will also seek to capitalize on the potential for re/insurance solutions in emerging and fast-growing markets in Asia and South America.”

The report also announced several top management changes. Matthias Weber will become Group Chief Underwriting Officer, effective April 1 and will also join the Group Executive Committee. He is currently Division Head Property & Specialty Reinsurance and a member of the Group Management Board.

Martyn Parker, CEO Reinsurance Asia and Regional President Asia, will become Chairman Global Partnerships and will thus succeed Michel M. Liès in this function. He will step down from the Group Executive Committee and become a member of the Group Management Board.

Moses Ojeisekhoba will succeed Parker as CEO Reinsurance Asia, Regional President Asia and member of the Group Executive Committee, effective March 15.

The complete report and information on accessing the earnings conference call may be obtained on the company’s website

Source: Swiss Re

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