NU Online News Service, Feb. 18, 3:14 p.m. EST
Swiss Re reported 2009 fourth-quarter net income of 403 million Swiss Francs (CHF) ($373.2 million) reversing a net loss of CHF 1.7 billion ($1.6 billion) for the period the previous year.
The Zurich-based company said for the full-year 2009 net income was 506 million Swiss Francs ($468.6 million), compared to a 2008 net loss of CHF 864 million ($800.1 million). The Zurich-based global reinsurer pointed to its rise in book value and strong performance in its core businesses.
In a video statement, Swiss Re Chief Financial Officer George Quinn, mentioned the net income figure, but said that "capital is at least as important a topic in 2009." He said the company experienced a CHF 5.7 billion ($5.3 billion) increase in book value, leading to book value of CHF 26.2 billion ($24.3 billion) by the end of 2009.
Mr. Quinn added, "Perhaps more importantly, we're reporting today that we estimate the excess over…the minimum capital requirement for a AA rating is now more than 9 billion [Swiss Francs]."
That excess, he said, gives the company confidence it can achieve objectives set last year, such as the redemption of the Berkshire Hathaway security in 2011. Last year, Swiss Re received a CHF 3 billion ($2.8 billion) loan from Berkshire Hathaway after sustaining its 2008 net loss.
Swiss Re said 2009 net income was impacted by impairments of CHF 2 billion ($1.9 billion), mainly in its securitized products portfolio, and by mark-to-market losses of CHF 1.9 billion ($1.8 billion) on corporate bond hedges.
For its property and casualty business in 2009, Swiss Re reported a 39 percent increase in operating income to CHF 3.8 billion ($3.5 billion), compared to 2008 operating income of CHF 2.7 billion ($2.5 billion).
The combined ratio for p&c business was 88.3 for the year, compared to a 2008 combined ratio of 97.9. The company attributed the improvement to "careful underwriting and lower levels of natural catastrophe losses."
Premiums earned dropped to CHF 13.9 billion ($12.9 billion) for the year compared to CHF 14.4 billion in 2008.
Swiss Re said it has also significantly reduced its Legacy exposure during 2009. "The company terminated substantially all of its exposures in the portfolio CDS [credit default swaps], and liquidated several positions from the former Structured CDS," Swiss Re said. The company added, "For the full year, Legacy generated operating income of CHF 139 million ($128.7 million), compared to a net operating loss of CHF 5.9 billion ($5.5 billion) in 2008."
Stefan Lippe, Swiss Re's chief executive officer, said of the company's 2009 results, "Today, I am proud to say we have come a long way. First, we have fully restored our capital position. Second, we have significantly de-risked and strengthened our balance sheet. And third, we have maintained the strong earnings power of our core business through underwriting profitability and cost discipline throughout the group.
"These robust achievements for the year enable us to continue to support our clients and generate value for our shareholders."
Mr. Quinn added in a statement, "Our declared priority is to regain AA rating and to redeem the convertible perpetual capital instrument. The substantial improvement in our financial flexibility increases our confidence that we will achieve these targets."
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