Swiss Re Posts $786 Million Q2 Net Income; But P&C Combined Ratio 100.7%

Swiss Re reported net income of $786 million for the second quarter of 2013, despite what the report described as a “period that saw high levels of natural catastrophes.” Net income in Q2, 2012 was $83 million.

Swiss Re said “premium growth in the property and casualty businesses continued with a good renewal season in July. All business segments contributed positively to the robust results and profitable growth.”

Group CEO Michel M. Liès commented: “Our company has delivered another robust performance. This comes against the backdrop of high claims, especially those caused by the devastating floods in Europe and Canada. Throughout our 150-year history we have used our financial strength to help people recover from such floods and other destructive events. Our strategy is key to that mission and to the delivery of our 2011–2015 financial targets. Our focus remains on executing on that strategy.”

The Group’s return on equity (ROE) was 10.0 percent, while shareholders’ equity was $30.1 billion. The report explained that the decrease in shareholders’ equity from $34.8 billion at the end of Q1 2013 “reflects the second quarter payment to shareholders of $2.8 billion for the 2012 regular and special dividends as well as a reduction in unrealized gains caused by higher interest rates.”

Group CFO George Quinn commented: “Our operational performance continues to be strong as is our return on investments. We have realized significant gains from the sale of government bonds as we rebalance our asset portfolio into credit and equities and from active management of the equity portfolio.

“As announced at our Investors’ Day this year, we have started to take the first steps to achieve our target capital structure which will contribute to the achievement of our financial targets. We are also implementing productivity measures across the Group to achieve USD 250–300 million in savings by the end of 2015, with the goal of redeploying these savings to finance profitable growth opportunities.”

Net income in the group’s P&C reinsurance sector decreased in Q2 2013 to $468 million, compared to $717 million in Q2 2012. “Mark-to-market gains on private equity, realized gains on investments and a lower tax rate helped the result. Premiums earned were $3.2 billion, an increase of 12 percent from $2.8 billion in Q2 2012 due primarily to the expiry of a major quota share agreement,” Swiss Re said.

“The combined ratio was 100.7 percent (vs. 81.0 percent in Q2 2012), reflecting flooding in Europe and Canada as well as lower reserve releases. Adjusting for expected natural catastrophes and prior year development, the underlying combined ratio for Q2 2013 was 97.9 percent.”

Liès also pointed out that Swiss Re is about to celebrate the 150th anniversary of its founding. He said we are “proud of our 150-year tradition of supporting economic progress and stability. We are already looking at how we will continue that commitment. This includes strategic themes such as big data and ever more sophisticated analytics or new ways of reaching clients. This adds to our already intense focus on high growth markets and all the efforts are directed towards increasing access to insurance for the people in the world who are currently underinsured.”

Source: Swiss Re