NU Online News Service, Nov. 3, 2:01 p.m.EDT

Global reinsurer Swiss Re says 2011 third quarter net income was$1.3 billion, up 118 percent from $618 million in the 2010 thirdquarter as the company saw positive contribution from allsegments.

Stefan Lippe, Swiss Re's chief executive officer, says in astatement, “Our underlying earnings power is very strong and ourconservative asset management approach is proving to be appropriatein these times of heightened financial market volatility.”

Swiss Re’s total revenue in the quarter was down 32 percent to$5.6 billion, compared to $8.3 billion a year ago. But the companysaw total expenses of $4 billion in the 2011 third quarter,compared to $7.4 billion in the 2010 third quarter.

On the expense side, "return credited to policyholders" swungfrom negative-$1.98 billion to positive-$2.19 billion. A Swiss Respokesperson explains that this figure refers to investments thatthe company adminsters on behalf of policyholders. Returns on thoseassets are credited to the policyholder. The assets can beequities, the spokesperson adds, and in a quarter like the 2011third quarter where equities lose value, the return to thepolicyholder can be negative if the account swings to a loss.

For property and casualty, operating income decreased 7.3percent to $1 billion, compared to $1.1 billion in the 2010 thirdquarter. The 2011 third quarter was impacted by reserve increasesfor the Feb. 2011 New Zealand earthquake as well as HurricaneIrene, Typhoon Nesat and an explosion at a naval base inCyprus.

Net premiums earned grew 18 percent from $2.9 billion in the2010 third quarter to $3.4 billion in this year’s thirdquarter.

The combined ratio rose 4.4 points to 80.8, driven by “thecomparatively higher large-loss burden, only partially offset bythe improved net development in prior accident years,” Swiss reexplains. The company adds that 11.4 points of the combined ratiorelates to the net impact form natural catastrophes, which is 3.1points below the expected level.

George Quinn, chief financial officer, says in a video posted onSwiss Re’s website says property and casualty was the main driverof the company’s results. “We’ve benefited in this quarter fromstrong underwriting performance, from moderate [naturalcatastrophe] experience, and a positive impact from prior yearclaim development,” he notes.

Life and health, he says, was “neither good nor bad, butOK.”

Speaking to market conditions, Quinn says there is bad news thatshould push rates up, including the impact of low interest rates,fall in equity markets, the Euro-zone crisis, and the number ofnatural catastrophes, including the current flooding event inThailand. He says these factors should contribute to thecontinuation of the “broad market turn” that started earlier thisyear.

In its statement, Swiss Re says Asset Management “delivered avery strong operating income of $1.2 billion…with a significantcontribution from net-realized investment gains of $354 million,mainly from government bonds.”

The company notes that its exposure to sovereign debt issued byperipheral Eurozone countries “remains very low at $74 million” andits exposure to Greek sovereign debt “is nil.”

Swiss Re also addresses the impact of the floods in Thailand,stating it expects the event to have a “severe impact on industrialbusinesses that have established manufacturing facilities locally.”Reliable claims estimates cannot be made at this time, Swiss Resays, as the flooding is still ongoing.