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Swiss Re Delivers Q1 Group Net income of $1.4B; Excellent Group Combined Ratio of 72.4%

Posted on 02 May 2013 by Neilson

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Swiss ReSwiss Re reports a very strong Group net income of $1.4 billion for the first quarter of 2013, 21% higher than the $1.1 billion net income reported in the prior year period. 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, says: "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."

Excellent Group combined ratio of 72.4%; good investment performance

In the first quarter of 2013, Swiss Re's Group net income increased 21% to USD 1.4 billion from USD 1.1 billion in the prior-year period. Premium and fee income increased 9% to USD 6.8 billion (vs USD 6.2 billion in the first quarter of 2012) as a consequence of organic growth, the expiry of a 20% 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%, 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 annualised return on investments was 3.4% in the quarter (vs 4.0% in the same period last year).

George Quinn, Swiss Re's Group Chief Financial Officer, says: "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."

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

Property & Casualty Reinsurance net income up 53%

P&C Re net income increased by 53% to USD 1.0 billion from USD 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% to USD 3.5 billion (vs USD 3.1 billion in the prior year period), mainly due to the expiry of a 20% 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%, a significant improvement over the 85.0% reported last year.