Despite the challenges posed by a year of extraordinary catastrophes, Swiss Re says its 2011 net income increased by more than $1.7 billion thanks in part to a reserve release of $1.3 billion.

The Zurich, Switzerland-based reinsurance and insurance company says net income rose from $863 million to $2.6 billion in 2011. Revenues on the year dropped 3 percent, or $752 million, to $28.1 billion.

The results were helped by the elimination of a one-time charge taken last year to pay off a $2.6 billion loan instrument from Berkshire Hathaway. Excluding the loan re-payment in 2010, Swiss Re’s net income would have been $2.3 billion, which translates into a $300 million increase in net income from 2010 to 2011.

In a video presentation, CFO George Quinn calls 2011 a challenging year for both insurers and reinsurers, noting the financial volatility in Europe and the extraordinary number of natural catastrophes that made last year “the costliest year from an economic perspective.”

Quinn says Swiss Re’s P&C insurance segment was “very strong” despite the catastrophes, posting a combined ratio of 101.6—up 7.7 points from 2010.