Swiss Re, one of the world’s biggest reinsurers, on Tuesday returned to strong profit in the third quarter, cautiously turning its back on losses that had depressed the group’s outlook for the year.
Swiss Re posted 334 million Swiss francs (221 million euros, 326 million dollars) net income in the third quarter, the company said in a statement. “The outlook for our company is encouraging. In the first nine months of 2009, we restored our capital position,” said chief executive Stefan Lippe.
The Zurich-based group was severely hit by the financial crisis and has been struggling to regain profitability.
The result, which compared with a 304 million franc loss in the equivalent period last year, was towards the upper end of analysts’ expectations.
Net premiums earned fell by 11 percent to 5.84 billion Swiss francs in the third quarter. But the group reported growth in net operating income of 388 million francs in life and health insurance, and 998 million francs in property and casualty, partly due to low levels of natural catastrophes in the third quarter.
After a record annual loss of 864 million francs in 2008, Swiss Re had appeared on course for a turnaround this year when it reported a 150 million franc profit during the first three months.
But a heavy 381 million Swiss franc loss in the second quarter, which was largely blamed on its financial ventures rather than its core reinsurance business, had depressed the company’s outlook for 2009.
Swiss Re warned in August that future earnings could continue to be influenced by financial market trends, despite improving conditions in reinsurance markets.
Lippe on Tuesday described the performance of its core reinsurance business as “strong” while the company had also amassed “substantial” excess capital so far this year.
The group suffered 1.2 billion francs in losses from the US subprime home loan crisis, forcing it to turn to Wall Street sage Warren Buffett to prop up its finances, most recently with a fresh 3.0 billion franc boost in February.
Chief executive Jacques Aigrain and chairman Peter Forstmoser later resigned after Aigrain was widely blamed for having led the reinsurer into the risky world of investment banking since he took over in 2006.
Lippe said the company was now setting its sights on insurance renewals in January 2010. “While the market fundamentals point towards higher prices, restored industry capital and the absence of hurricanes may partially delay the market correction,” Lippe said. “With our very profitable reinsurance portfolio and proven underwriting track record, we are well placed for the upcoming renewal season,” he added.
Swiss Re has announced about 1,000 job cuts worldwide to trim costs. The group now expects its restructuring plan to yield 150 million to 200 million Swiss francs in savings.
With AFP (ZURICH, Nov 3, 2009)
