The FINANCIAL — Swiss Re reports a strong net income of USD 3.3 billion for the first nine months of 2014, USD 1.2 billion of which was earned in the third quarter alone. All Business Units contributed to the result, as well as a 13.3% return on equity during the first nine months. Swiss Re remains on track to meet its stated 2011–2015 financial targets. The strong performance demonstrates the importance of close client relationships and differentiated services in a more difficult market environment, according to the Swiss Re Group, one of leading wholesale providers of reinsurance, insurance and other insurance-based forms of risk transfer.
“Swiss Re’s net income over the first nine months of 2014 is a successful result. We’ve again made good progress towards our financial targets and we’ve closed significant deals that show we can provide our clients with smart risk transfer solutions. This result is proof that going the extra mile for our clients pays off, especially as the markets continue to be soft and economic conditions seem to become more uncertain,” Group CEO Michel M. Liès said.
Group reports strong 9M net income
All Business Units have again contributed to deliver a net income of USD 3.3 billion for the first nine months of 2014 (vs. USD 3.2 billion in 9M 2013). The annualised return on equity for the nine months stands at 13.3%.
The Group’s annualised return on investments for 2014 was 3.7% for the nine months ending 30 September 2014. A higher result from long-term fixed income saw the Group’s overall net investment income grow to USD 3.1 billion for the nine months (vs. USD 2.9 billion).
Book value per common share rose to USD 98.27 or CHF 93.90, compared to USD 93.08 or CHF 82.76 as of 31 December 2013. Swiss Re’s Group capital position remains strong with common shareholders’ equity of USD 33.6 billion. The Group Swiss Solvency Test ratio, as filed with FINMA at the end of October 2014, stands at 249%, according to Swiss Re.
Property & Casualty Reinsurance delivers a strong 9M profit based on lower nat cat losses, strong client relationships and applied R&D
Property & Casualty Reinsurance reported net income of USD 2.4 billion over the first nine months of the year, compared to USD 2.2 billion for the prior-year period. The result was driven by benign natural catastrophe and man-made losses and net reserve releases from the prior year. The combined ratio improved to 82.7% for the year to date (vs. 83.6%). Premiums earned rose by 10% to USD 11.7 billion (vs. USD 10.7 billion).
P&C Re has continued to strengthen its client relationships, most notably through research and development activities and at various industry events. Predictive modelling in the casualty business and for European winter storms are two leading examples of how Swiss Re is making its expertise available to clients.
Life & Health Reinsurance improves operating margin; closes profitable new deals
Life & Health Reinsurance reported net income for the nine months of 2014 of USD 272 million (vs. USD 420 million). The decrease in net income resulted mainly from realised losses during the period under review. These were partially offset by lower interest expenses and higher operating income. Premiums earned and fee income were 16% higher at USD 8.4 billion (vs. USD 7.3 billion). The operating margin was 8.8% (vs. 8.2%).
Throughout 2014 L&H Re has shown that it is well-placed to write new large deals. For example, the US medical team signed a sizeable deal in the third quarter demonstrating Swiss Re’s ability to respond to clients’ needs in the USD 3 trillion healthcare industry. In Asia, Swiss Re recently increased its share in a health contract for coverage of hospital cash business, according to Swiss Re.
Corporate Solutions continues growth and expands footprint
Corporate Solutions reported net income in the first nine months of 2014 of USD 249 million (vs. USD 227 million in 9M 2013). Net premiums earned of USD 2.6 billion were 23% higher than in the prior year, including the expiry of a major quota share agreement in 2012. The result reflects continued organic growth across most business lines and a lower than expected natural catastrophe experience. Corporate Solutions’ combined ratio was 92.9% in the first nine months of 2014, compared to 93.8% in the same period of 2013.
The announced acquisition of insurer Sun Alliance (China), which is pending regulatory approval, will enable Corporate Solutions to offer corporate insurance directly from mainland China, according to Swiss Re.
On track to meet financial targets
The Group remains well on track to meet its 2011–2015 financial targets. New multi-year targets starting from 2016 will be announced with the Full Year 2014 Results on 19 February 2015.
Opportunities exist to grow further, especially in High Growth Markets where insurance penetration is currently still low but increasing wealth is generating greater demand for financial protection. Swiss Re expects that the long-term increase in demand will outweigh the current supply pressures in the market, according to Swiss Re.
“We understand that there is uncertainty in the market and challenges undoubtedly do exist. As a result, rigorous cycle management, portfolio steering and underwriting discipline will remain our main tools to be able to generate success going forward. We will remain firmly focused on profitable growth, while making sure we support our clients so they can pursue profitable opportunities,” Michel M. Liès said Group CEO.
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