Operating income from company's property/casualty operations fell 48.1% to $1.29 billion down from $2.48 billion due to natural catastrophe losses and reduced investment income. The combined ratio rose to 101.6 from 93.9. The 2011 combined ratio included 29.6 points from $3.4 billion in catastrophe losses, Chief Financial Officer George Quinn said during a conference call.
Cat losses were partly offset by the favorable development of prior accident years, which led to reserve releases of about $1.3 billion.
Operating income for the company's life/health segment fell 42.7% to $464 million from $810 million, reflecting the financial market volatility, as well as increased costs in Admin Re relating to the strategic realignment of the business to the new segment structure.
The company realigned into three business units last year: reinsurance, corporate solutions and Admin Re, said Michel M. Lies, the company's new chief executive officer.
Corporate solutions is the company's risk management and financing arm. Through Admin Re, Swiss Re acquires closed blocks of in-force life and health insurance business, either through reinsurance or corporate acquisition, and typically assumes responsibility for administering the underlying policies.
Swiss Re's asset management delivered operating income of $5.04 billion up from $4.47 billion. The total return on investments, including unrealized gains and losses, rose to 9.7% from 6.5%.
The euro sovereign debt crisis continues to create market uncertainty, Swiss Re said, but noted its "prudent investment stance" has paid off. Swiss Re's exposure to sovereign debt issued by peripheral eurozone countries has been further reduced to $59 million at year-end versus $74 million at end of September 2011. The company said it has no exposure to Greek sovereign debt.
Swiss Re's property/casualty treaty renewals showed strong premium growth of 20% across all regions. The average price increase for the renewed book was 4%, Lies said.
Quinn said Swiss Re intends to capture business opportunities offered in its core reinsurance and insurance activities, including a 25% growth opportunity offered by the expiry of the quota share agreement with Berkshire Hathaway at the end of 2012.
The company also announced that Matthias Weber will assume the position of group chief underwriting officer effective April 1. He is currently division head of the company's property/specialty reinsurance arm.
Also, Martyn Parker, CEO of reinsurance Asia and regional president Asia, will become chairman of Global Partnerships, succeeding Lies.
Lies was tapped to take the helm as CEO as Stefan Lippe retired earlier this year.
In January, Swiss Re said the devastating earthquakes of 2010 and 2011 highlighted some blind spots in the industry's underwriting and catastrophe modeling.