Swiss Re Posts $2.2 Billion Q3 Net Income

November 8, 2012

Swiss Re reported net income of $2.2 billion in the third quarter of 2012, compared to $1.3 billion in the prior-year period, and a return on equity of 28 percent, “driven by continued strong performance from P&C Reinsurance and a one-off gain from the sale of the Admin Re® US business.”

The report also indicated that “growth in premiums and net income at the Corporate Solutions Business Unit are in-line with targets,” and Swiss Re said it “remains well-placed to achieve its five-year financial targets and to support clients in a volatile environment.”

Group CEO Michel M. Liès commented: “We have achieved very good financial results in a volatile environment. A low large loss burden and the one-off gain from the sale of the Admin Re® US business in the quarter undoubtedly helped, but the excellent performance in P&C Reinsurance shows that our underlying business continues to perform strongly.”

Group return on investment was 4.5 percent; Group premiums earned and fee income increased by 11 percent to $6.6 billion ($5.9 billion in the prior-year period). Swiss Re’s Group combined ratio was 72.0 percent (85.3 percent in Q3 2011). Investment income was $1.0 billion with a Group return on investment of 4.5 percent.

Shareholders’ equity increased to $33.5 billion from $31.0 billion, and book value per common share rose to $94.47 or CHF 88.79, compared to $87.03 or CHF 82.38 at the end of the second quarter 2012. Earnings per share for the third quarter 2012 were $6.33 (vs. $3.94 a year earlier).

Swiss Re highlighted its “very strong net income – $1.0 billion, compared to $731 million – in P&C Reinsurance,” as demonstrating its “excellent underwriting performance,” as well as the “earnings power” of its underlying business.

Premiums earned increased by 15 percent to $3.3 billion (vs. $2.9 billion). The bulletin noted that the “result was helped by reserve releases and a very benign claims environment in the quarter with comparatively low losses from natural catastrophes. The combined ratio was an exceptionally low 69.3 percent (vs. 81.5 percent). Successful renewals in the first half of the year also contributed to strong top-line growth, which led to a drop in expense ratios.”

Group CFO George Quinn observed: “The economic and business environment remains volatile and this is unlikely to change in the near future. Our first priority is to deliver on our financial targets and provide our shareholders with a sustainable dividend that we plan to increase in-line with long-term earnings.

“Beyond that, we will look to deploy any remaining excess capital above our stated target level to those areas of our business where we see profitable opportunities. If we are unable to find opportunities that meet our return expectations, we would look at further measures to return excess capital, such as a special dividend.”

On a more somber note Swiss Re noted that “Hurricane Sandy, which made landfall in New Jersey on 29 October 2012, caused high winds and storm surge, resulting in extensive flooding. Estimating claims is particularly complex due to the combined impact of prolonged power outages, disruptions to public transport and damage to other infrastructure. As a consequence, it is not possible to provide a reliable claims estimate at this time.”

Swiss Re also pointed out that it has “been named for the fifth year in a row the most sustainable company in the insurance sector by Sustainable Asset Management (SAM). Swiss Re therefore leads one of the most respected corporate sustainability rankings in the world, which is also the basis for inclusion in the Dow Jones Sustainability Index (DJSI). In the 2012 DJSI review, Swiss Re was ahead of over 120 sector competitors.”

Liès, indicated that the Group is “particularly proud to be recognized again as the world’s most sustainable insurance company. This is an important confirmation of our commitment to sustainability, the foundations of which we laid almost 20 years ago, and an indication of the attention that is increasingly paid to non-financial metrics. What is more, our partnership with the ambitious Solar Impulse aviation project shows that we can convert intangible qualities like sustainability and innovation into concrete business opportunities.”

Source: Swiss Re

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