Swiss Re Back To Black In 2003

Swiss Re Back To Black In 2003

NU Online News Service, March 25, 2:44 p.m. EST?Swiss Reinsurance Company reported its first annual profit since 2000, posting net income of 1.7 billion Swiss francs ($1.33 billion under current exchange rates) in 2003, in contrast to a loss of 91 million Swiss francs ($71.19 million) in 2002, boosted by favorable market conditions for its property and casualty reinsurance offerings. [@@]

The company also offered up a rosy forecast for this year despite what it conceded was "a plateauing-off of property rates."

Swiss Reinsurance, the world's second-largest reinsurer, just behind Munich Re, had suffered significant losses in the wake of the Sept. 11, 2001 terrorist attack and equity-market doldrums.

But in 2003, Chief Executive Officer John Coomber remarked, Swiss Re saw "good performance from all three business groups."

Exceptional progress was made in non-life reinsurance, where underwriting profitability improved significantly, according to Swiss Re. Property-casualty lines in particular, Mr. Coomber observed, developed positively, reflecting favorable market conditions. "We expect further improvements across the group in 2004," he said.

Overall, net premiums were up 6 percent in 2003, to 30.7 billion Swiss francs ($24.02 billion). In Swiss Re's p-c business group, premiums were up by 16 percent to 17.4 billion Swiss francs, ($13.61 billion), attributable to higher premium rates as well as organic growth, the reinsurer reported. The total combined ratio improved to 98.4 last year, from 104.1 in 2002.

Furthermore, Swiss Re's return on investments rose to 5.1 percent in 2003, from 4.7 percent in 2002, which was then heavily affected by impairment charges on poor-performing stocks. Swiss Re declared it has further cut its exposure to equity markets in 2003 and continued its strategy of concentrating capital on its core reinsurance businesses.

Mr. Coomber also declared that Swiss Re is "off to a good start in 2004." In addition to further improvements on the back of 2003 pricing actions in property-casualty, the January 2004 renewals for traditional treaty business have produced a further seven percent increase in premiums, including a four percent improvement in prices, Mr. Coomber said.

Mr. Coomber anticipated during an analyst conference call that attractive pricing conditions for his company "will continue for some time.'' But Chief Financial Officer Ann Godbehere added in a bit of a caveat: "We do see a plateauing-off of property rates at very good terms," she said. But she assured that the casualty business continues to grow "across the board.''

Additionally, there is one potential-loss area that Swiss Re is keeping a close eye on?the federal jury trial against World Trade Center leaseholder Larry Silverstein on the WTC coverage, where Mr. Silverstein is hoping for a double-dipping?a finding of two insured occurrences for the WTC loss.

In the worst-case scenario, Swiss Re noted, the reinsurer is looking at a loss of about $780 million at most, based on its 22 percent share of the Twin Tower coverage.