Swiss Re reported first quarter profit rose 22 percent over the same period last year despite significant catastrophe losses in its property and casualty segment that resulted in a 19.2 point increase in its combined ratio.
The Zurich, Switzerland-based reinsurer reported net income of $158 million, up $28 million from the same period last year. Earnings per share rose 6 cents from 39 cents to 45 cents a share.
The company also revealed today that it estimates its losses from the Deepwater Horizon oil rig at $200 million before taxes. It said it expects the total insured market loss from this event to be in the range of $1.5 billion to $3.5 billion.
"However, as the situation is still unfolding and involves significant uncertainties, the ultimate loss is hard to predict and therefore estimates may be subject to change," the company said.
Total revenues in the quarter, Swiss Re reported, increased 55 percent, or $2.88 billion, to $8.07 billion, primarily on the strength of investment gains.
The company, reporting its results for the first time in U.S. dollars, said p&c operating income stood at $259 million, a 69 percent decrease over last year's results of $846 million for the first quarter of 2009. Premiums earned dropped 16 percent, or $528 million, to $2.85 billion. The combined ratio increased to 109.4 versus 90.2 for the same period last year.
Swiss Re said first quarter p&c results were impacted by an estimated $500 million loss from the Chile earthquake and $100 million loss from European winter storm Xynthia.
"In the first quarter of 2010, we continue to deliver strong underlying performance, even though the result was impacted by high natural catastrophe losses," said Stefan Lippe, Swiss Re's chief executive officer, in a statement.
Mr. Lippe added, "While natural catastrophes like these can contribute to earnings volatility, protecting our clients against such extreme events is the essence of our business model."
George Quinn, the company's chief financial officer, said in a recorded statement on the Swiss Re website, "The recent loss events will serve to increase risk awareness and this will be beneficial at upcoming renewals."
The company, he advised, has "taken all the key steps to make sure we have achieved the efficiency goal we set for ourselves of 400 million Swiss francs. And our excess capital is at a level that will not only allow us to achieve goals that we set last year, but also give the company significant flexibility going forward."
Mr. Quinn said the company estimates that it has excess capital of more than $12 billion than what is required for a "double-A" rating.
Outside of p&c, the company's life and health business operating income grew by $1 million to $245 million with a benefit ratio that increased 0.5 points to 87.4. Premiums earned dropped 8 percent, or $175 million, to $2.12 billion.
Driving revenue results, the company said, was a dramatic improvement in investments that rose to $1.38 billion from a first quarter loss last year of $2.02 billion.
"Primary insurance volumes and prices remain under pressure, delaying the hardening of the reinsurance market," said Mr. Lippe. "In this market environment, we will continue to drive innovation, focus on disciplined underwriting and deploy capital to those lines of business where we expect to achieve returns that meet our ROE (return on earnings) target of 12 percent over the cycle."
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