Swiss Re said it “will continue to remain focused on economic profit growth, at the expense of premium volume, if necessary,” adding that the world’s largest reinsurer “is well positioned for the upcoming renewals in January 2008, due to its broad client base, well diversified book of business and financial strength.”
The statement indicates that Swiss Re expects “solid results in 2007.” However, the Company forecasts that industry losses from natural catastrophes for the year will amount to roughly $35 billion, “well above a benign 2006 with $12 billion in natural catastrophe claims, continuing the long-term trend towards high natural catastrophe claims.”
Swiss Re also remarked that the “recent capital market volatility re-emphasizes the value of reinsurance as an effective measure for risk diversification and this will have modest positive consequences for demand.”
Underwriting discipline has been an often-repeated mantra from the big players in the reinsurance industry over the last six years. Swiss Re, Lloyd’s, Munich Re, Hannover Re and Berkshire Hathaway (General Re) among others have all issued strong statements committing themselves to making money from underwriting, rather than chasing market share.
Swiss Re said the industry appears to be adhering to that commitment. It pointed out that “in 2007 alone, insurers and reinsurers announced the return of approximately CHF 45 billion [$37.9 billion] to shareholders in the form of share buy-backs, including CHF 6 billion [$5.05 billion] from Swiss Re.”
The new EU Solvency II regulations, which are scheduled to come into force in 2012, emphasize a “more transparent risk management approach,” Swiss Re observed, which “will further drive reinsurance buying behavior.”
However, Swiss Re noted that “despite this, prices in some lines, most notably in some areas of US casualty, have declined to levels that do not support the required returns for shareholders.”
In a statement prepared for its media conference at the start of the Reinsurance Rendez-vous in Monte Carlo, Swiss Re’s CEO Jacques Aigrain commented: “While the overall market conditions remain good and clients continue to place a premium on their relationships with Swiss Re, we will not hesitate to re-allocate our resources to those areas where we can earn the most attractive returns. We believe that our consistent underwriting approach, risk management expertise and capital market capabilities place us in a favorable position to offer attractive solutions to our existing and future clients.”
Source: Swiss Re’ – www.swissre.com
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