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Swiss Re continued its recent run of strong quarterly earnings, with net profits of $1.14bn in the first three months of the year, compared with a $665m loss this time last year, when earnings were hit by the earthquakes in New Zealand and Japan and floods in Australia.
The Swiss re-insurance group attributed the result to buoyant underwriting, good investment performance, as well as lower than expected losses from natural catastrophes. Earnings were also helped by some one-offs.
Total premiums jumped nearly 22 per cent to $6.2bn thanks to strong renewals in the annual January round. The group combined ratio, an industry yardstick for costs and claims as a proportion of premiums – was a “strong” 84.9 per cent.
In the previous year the ratio had slumped to an exceptionally poor 163.7 per cent because of the natural catastrophes, causing the first-quarter 2011 loss.
Return on investment edged up to 4 per cent from 3.9 per cent.
“We had a good start to the year with a very strong result in the first quarter. This reflects our ability to perform and grow as prices rise, and an excellent asset management result,” said Michel Liès, chief executive.
The robust first quarter prompted an optimistic outlook statement. “We aim to capture the opportunities we see arising from the hardening of the property and casualty reinsurance market, strong economic growth in the emerging markets and the challenge of resultory changes such as Solvency II,” said Mr Liès.
Swiss Re said renewals in April – another key month in the annual reinsurance cycle, though mainly focused on Asian business – had been “very successful”.
“Renewals in Japan were excellent, with Swiss Re benefiting from very strong rate increases in natural catastrophe related business,” the group noted. Other Asian markets also did well, with total April renewals up 14 per cent and pricing improved.
Net profits in the core reinsurance division of $660m were an almost exact opposite of the $632m loss reported last year, while premiums surged by more than 38 per cent to $3.1bn – scotching any lingering fears of anaemic top-line growth as the group focuses on more profitable lines.
The combined ratio improved to 85 per cent from 171 per cent last year. In the same period last year, the division reported a $2.3bn pre-tax loss.
Life and health remained solid, with net profits of $209m compared with $14m last time, boosted by higher premiums and fees.
The corporate solutions division also improved its results, with net profits of $84m, compared with a $42m loss last year. Premiums jumped by more than 28 per cent to $531m thanks to new business and the absence of large natural catastrophes.