Swiss Re joined the parade of European insurers announcing happy results for 2003. Net income increased to CHF 1.7 billion ($1.33 billion), while net premiums jumped to CHF 30.7 billion ($24 billion).
It’s the first profitable year for the world’s second largest insurer since the Sept. 11 attacks. It posted a CHF 165 million ($129.2 million) loss in 2001 and another CHF 91 million ($71.2 million) loss last year.
P/C business was especially strong with premiums up 25 percent in original currencies and a combined ratio that fell to 98.4 percent. CEO John Coomber commented: “Swiss Re’s 2003 results reflect good performance from all three business groups. Property and casualty lines in particular developed positively reflecting favourable market conditions. We expect further improvements across the Group in 2004.”
The earnings announcement noted that “all three business groups contributed to Swiss Re’s 2003 net income. Particular progress was made in non-life reinsurance where underwriting profitability improved significantly. Overall net premiums increased 6 percent, or 16 percent at constant foreign exchange rates, to CHF 30.7 billion [$24 billion]. Operating efficiency improved across all business groups in 2003 and cost initiatives will further benefit 2004 and beyond.”
Commenting on Swiss Re’s earnings, A.M. Best Co. indicated they fell “within the range of expectations already factored into its A+ (Superior) financial strength rating, which remains unaffected.”
The rating agency added that “Pricing conditions in property/casualty, where Swiss Re achieved average rate increases of 4percent at the January 2004 renewals and a 16 percent premium growth in 2003, will continue to positively influence accident year combined ratios. However, as seen in the 2003 results, adverse loss developments from previous years—liability classes in particular—are still negatively impacting the consolidated underwriting performance.
“The strengthening of asbestos and environmental (A&E) claims reserves at its U.S. subsidiary in 2003 had only a marginal negative effect of CHF 88 million (USD 65 million). While the performance of the life reinsurance business remains strong with a 2003 reported return on revenue of 10.6 percent, despite low interest rates in the United States, it was offset by the partial run off of the health portfolio. Swiss Re has adjusted its profitability targets for 2004, and A.M. Best will monitor the achievement of these targets during the 2004 financial year.”
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