Swiss Re reports 12% increase in net income to US$3.7 billion

Global reinsurer Swiss Re has reported a 12% increase in net income to US$3.7 billion for the first nine months of 2015, US$1.4 billion of which was earned in the third quarter.

Swiss Re said in a statement on Thursday that all business units contributed to this result, with Life & Health Reinsurance in particular showing a strong increase in net income to US$3.7 billion, compared to US$3.3 billion in 9M 2014. “Generally, the result benefitted from disciplined underwriting, low natural catastrophe losses as well as reserve releases and strong results in Life & Health Reinsurance,” the statement said, noting that L&H Re reported net income of US$763 million for the nine months of 2015 ending Sept. 30, compared to US$272 million in 9M 2014. [click image below to enlarge]

“Swiss Re achieved a very strong net income over the first nine months of 2015,” Group CEO Michel M. Liès said in the statement. “Despite an overall insurance market environment that remains challenging, we’ve again made progress towards our 2011—2015 financial targets.”

Property & Casualty Reinsurance reported net income of US$2.3 billion over the first nine months of the year, compared to US$2.4 billion for the prior-year period. “The nine-month results benefitted a strong underlying portfolio, a benign natural catastrophe experience and positive prior-year development,” Swiss Re said. “The period was impacted by several large man-made losses notably the explosion in Tianjin, China, estimated at approximately US$235 million pre-tax for the unit.”

The combined ratio was 84.8% for P&C Re for the first nine months (vs. 82.7%). Premiums earned for the first nine months stood at US$11.4 billion (vs. US$11.7 billion). P&C Re reported net income of US$1 billion for the third quarter 2015 (vs. US$842 million in Q3 2014), reflecting the absence of large natural catastrophe losses, reserve releases and strong investment results.

Swiss Re said in the statement that Corporate Solutions reported US$324 million net income in the first nine months of 2015 (vs. US$249 million in 9M 2014). The 30% increase was driven by continued profitable business performance across most lines of business and net realized gains from insurance business in derivative form. The result was supported by the absence of natural catastrophe events. The man-made loss from the explosion in Tianjin, China impacted the result by US$15 million, pre-tax, the statement added. The combined ratio improved to 91.9% in the first nine months (vs. 92.9%). [click image below to enlarge]

 Corporate Solutions reported third quarter net income of US$85 million (vs. US$103 million in Q3 2014), driven by profitable business performance in most regions and an increased investment result. The combined ratio was 90.7% (vs 90.5%).

Admin Re reported net income of US$270 million in the first nine months of 2015 (vs. US$219 million in 9M 2014). The increase in net income reflected higher realized gains from sales of government bonds as part of the re-positioning of the portfolio that took place in preparation for Solvency II and tax credits following the finalization of the United Kingdom year-end statutory results, the statement said. Admin Re generated gross cash of US$265 million for the first nine months of 2015 (vs. US$615 million), with the prior year including the release of surplus reserves held against the risk of credit default and higher United Kingdom statutory valuation impacts. Admin Re delivered net income of US$21 million for the quarter (vs. US$54 million), impacted by unfavourable U.K. investment market performance.

“Looking ahead, opportunities exist to continue growing profitably, especially in High Growth Markets where insurance penetration is currently still low but increasing wealth is generating greater demand for financial protection,” the statement said. “Swiss Re expects that the long-term increase in demand will outweigh the current supply pressures in the market.”

Liès added that the uncertainty in the market continues to exist, but it is important to keep sight on the many opportunities still out there. “The economic cost of natural catastrophes has increased more than fivefold over the last 35 years and insurance hasn’t kept pace with the increased risk,” he said. “In fact, the gap between economic and insured losses has remained stubbornly large. Addressing this insurance gap represents an important long-term opportunity for the industry globally.”