Swiss Re Increases Net Income in Strong Q3

Swiss Re reports a 2012 third-quarter net income of $2.2 billion, up from $1.3 billion in 2011's third quarter, due in part to strong results in the company's property and casualty reinsurance segment.

The Zurich-based reinsurer says it also benefitted from a one-off gain from the sale of its Admin Re U.S. business to Jackson National Life Insurance Co. The deal was announced in May and closed in September.

Swiss Re said in September that it estimated a third-quarter gain of $600 million predominantly due to recycling of previously unrealized gains on the investments backing the insurance liabilities transferred to Jackson National Life Insurance Co.

The company took a $1 billion loss in its second-quarter results related to the transaction.

George Quinn, CFO, describes the third-quarter results in video comments as “very strong.” He attributes the strong P&C reinsurance results to healthy underlying results, benign catastrophe experience in the period and significant reserve releases from prior periods of over $400 million.

The third-quarter P&C reinsurance net income was just over $1 billion, up from $731 million a year ago. The combined ratio for this segment was 69.3, down from 81.5 in 2011's third quarter. Swiss Re says its premiums earned in its P&C reinsurance segment increased 15 percent in the quarter to $3.3 billion, compared to $2.9 billion a year ago.

CEO Michel M. Liès says in a statement, “We have achieved very good financial results in a volatile environment. A low large-loss burden and the one-off gain from the sale of the Admin Re U.S. business in the quarter undoubtedly helped, but the excellent performance in P&C reinsurance shows that our underlying business continues to perform strongly.”

Swiss Re says it remains on track to deliver on its financial targets for the period 2011-2015.

Quinn says in a statement that the company will look into returning excess capital in a dividend if it is unable to reinvest the funds in the business. “The economic and business environment remains volatile and this is unlikely to change in the near future,” says Quinn. “Our first priority is to deliver on our financial targets and provide our shareholders with a sustainable dividend that we plan to increase in-line with long-term earnings. Beyond that, we will look to deploy any remaining excess capital above our stated target level to those areas of our business where we see profitable opportunities. If we are unable to find opportunities that meet our return expectations, we would look at further measures to return excess capital, such as a special dividend.”