Swiss Re Reports $1.4 Billion Q1 Net Income; Combined Ratio of 72.4%

May 2, 2013

Swiss Re’s earnings report reflected the lack of significant catastrophe events in the first quarter of 2013, which, except for the nasty winter weather in many parts of the world, didn’t see any high cost loss events.

The world’s second largest reinsurer posted net income of $1.4 billion for the period, compared to $1.1 billion in Q1 2012, and a group return on equity at 16.6 percent.

The earnings bulletin also listed the following highlights:
• First-quarter premiums earned and fee income at $6.8 billion [Q1 2012 $6.2 billion]
• P&C Re and Corporate Solutions with very strong underwriting results; excellent Group combined ratio of 72.4 percent
• Successful April renewals; price quality remains strong
• Swiss Re on track to reach financial targets in a difficult economic environment

The bulletin said: “Very strong underwriting performances across Swiss Re’s Property & Casualty Reinsurance and Corporate Solutions businesses were the key drivers of this performance. Life & Health Reinsurance saw flat profits whereas Admin Re® demonstrated an improving underlying earnings capacity. Swiss Re continues to be on track to achieve its 2011-2015 financial targets and is well placed to face the continued uncertainty in the global economic environment.”

Michel M. Liès, Swiss Re’s Group Chief Executive Officer, commented: “We are starting our 150th anniversary year with a very strong first quarter result. It demonstrates we have the right strategy and structure in place to reach our 2011-2015 financial targets. The successful April renewals are another proof of Swiss Re’s ability to perform and grow despite economic headwinds and a continuous low interest rate environment.”

Swiss Re attributed the increases as being a “consequence of organic growth, the expiry of a 20 percent quota share agreement with Berkshire Hathaway and comparatively low losses from man-made and natural catastrophes during the first three months of 2013. The Group combined ratio was 72.4 percent, continuing the long-term improving trend seen over the past years. This shows that Swiss Re has established a successful track record to underwrite risks prudently across all business lines, also in a difficult economic environment.

“The annualized return on investments was 3.4 percent in the quarter (vs. 4.0 percent in the same period last year).”

George Quinn, Swiss Re’s Group CFO said: “The Group portfolio is fundamentally in very good shape but we will continue to focus on areas of underperformance. We will not hesitate to take decisive action to further improve overall returns.”

The report also noted: “Earnings per share increased to $4.02 or CHF 3.72 during the first three months, compared to $3.33 or CHF 3.08 in 2012. Shareholders’ equity slightly increased by $761 million to $34.8 billion. The return on equity further improved to 16.6 percent in the first quarter of 2013, up from 15.3 percent in the prior-year period. Book value per common share increased from $95.87 or CHF 87.76 at 31 December 2012 to $97.80 or CHF 92.84 at 31 March 2013.”

In addition Swiss Re said its “Property & Casualty Reinsurance net income rose by 53 percent to $1.0 billion from $660 million a year ago. The primary driver for this performance was a very strong underwriting result. In addition, reserve releases and lower than expected claims due to the absence of major man-made or natural catastrophes contributed to the result.

“Premiums earned during the first quarter rose by 15 percent to $3.5 billion (vs. $3.1 billion in the prior year period), mainly due to the expiry of a 20 percent quota share agreement with Berkshire Hathaway at the end of 2012 and premiums earned from large transactions concluded in the course of last year. The P&C Re combined ratio during the first three months was 69.7 percent, a significant improvement over the 85.0 percent reported last year.”

Source: Swiss Re

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