Swiss Re reports loss of USD 665 million for the first quarter 2011
Swiss Re reports a net loss of USD 665 million for the first quarter of 2011, compared to a profit of USD 158 million in the same period of 2010. Property & Casualty was impacted by a very high level of natural catastrophe claims, including the earthquakes in Japan and New Zealand and the floods in Australia. Stefan Lippe, Swiss Reâ€™s Chief Executive Officer, says: â€œIn the first quarter of 2011, we experienced exceptionally high losses from natural catastrophes. In the renewals following these events, we maintained our focused and disciplined underwriting approach. We were able to grow our P&C treaty book by 13% year to date and to outperform the market in terms of pricing adequacy.”
Shareholdersâ€™ equity down slightly to USD 24.4 billion
Swiss Re reported a net loss of USD 665 million for the first quarter of 2011, compared to a net profit of USD 158 million in the same period of the previous year. Annualised return on equity decreased to -10.7% in comparison to 2.7% for the first quarter of 2010. Earnings per share also decreased to CHF -1.84 (USD -1.94), compared with CHF 0.49 (USD 0.46) for the first quarter of 2010.
Shareholdersâ€™ equity declined slightly by USD 0.9 billion to USD 24.4 billion. Book value per common share was CHF 65.19 (USD 71.26) at the end of March 2011, compared to CHF 68.99 (USD 74.02) at the end of December 2010.
Large natural catastrophe losses, strong performance in Asset Management
Property & Casualty reported an operating loss of USD 1.2 billion,compared to an operating income of USD 259 million in the first quarter of 2010. This result was largely driven by natural catastrophe pre-tax losses of USD 2.3 billion. The combined ratio for Property & Casualty rose to 163.7% in the first quarter of 2011, compared to 109.4% in the prior-year period. The net impact from natural catastrophes on the combined ratio was 89.4 percentage points, which was 79.8 percentage points above the expected level.
Life & Health reported an operating income of USD 144 million in the first quarter of 2011, compared to USD 245 million in the prior-year period. The change in operating performance was driven by less favourable mortality and variable annuity results, only partially offset by favourable morbidity experience. The benefit ratio increased to 89.4% in the first quarter of 2011.
Asset Management delivered a strong operating income of USD 1.2 billion in the reporting period, compared to USD 0.9 billion in the first quarter of 2010. The annualised return on investments was 4.0% in the first quarter of 2011, compared to 2.8% in the first quarter of 2010.
Successful April 2011 renewals, outlook on P&C pricing improved
Swiss Re maintained its focused and disciplined underwriting approach in the April 2011 renewals, which covered approximately 10% of Swiss Reâ€™s Property & Casualty treaty book. April renewals take place in Japan, Korea and India, and to a lesser extent in Europe, Americas and the rest of Asia.
Swiss Reâ€™s Property & Casualty treaty business written premiums grew by 5% year-on-year in the April renewals, or by 13% year to date. Historically, large losses from natural disasters have been followed by price increases and stronger demand in the Property & Casualty market. Swiss Re believes the combination of the recent natural catastrophes, very low interest rates, and years of price declines are likely to bring forward the turn in the cycle.
Well positioned to take advantage of market opportunities
The first quarter of 2011 represented a test of strength for the insurance and reinsurance industry. The accumulation of natural catastrophe events is expected to turn 2011 into a year with one of the highest historical natural catastrophe claims burdens. Swiss Re has
weathered this test well thanks to the following factors:
ï‚§ Its exceptional capital strength: Swiss Re is in a strong position to underwrite large and complex risks;
ï‚§ Its global diversification over types of risk and regions: a key factor in its resilience;
ï‚§ Its outstanding re/insurance expertise and innovation power: core to its ability to help clients and societies deal with such challenges.
Stefan Lippe concludes: â€œWe remain committed to our five-year targets and are confident that we can deliver. The impact of natural catastrophe losses in the first quarter creates an additional challenge but it will also accelerate the market turn we had previously expected in 2012/2013.â€
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