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Swiss Re beats forecasts on lower disaster losses

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(Reuters) — Swiss Re, the world's second largest reinsurer, said on Friday net profit rose more than expected in the third quarter as it had to pay out less for natural and man-made disasters.

Swiss Re and German rivals such as Hannover Re and Munich Re help insurance companies cover the cost of major damage claims, such as for hurricanes or earthquakes, in exchange for part of the premiums their customers pay.

But fewer serious natural catastrophes in recent quarters and an increase in competition from alternative sources of capital for the insurance industry have been reducing reinsurers' pricing power and relevance.

A long-term increase in demand will outweigh the current supply pressures in the market, Swiss Re said.

“We understand that there is uncertainty in the market and challenges undoubtedly do exist,” Swiss Re chief Michel Lies said in a statement. “As a result, rigorous cycle management, portfolio steering and underwriting discipline will remain our main tools to be able to generate success going forward.”

Net profit rose 14% to $1.2 billion, due in part to more benign natural and man-made disaster claims, Swiss Re said.

The Zurich-based reinsurer was expected to post a third-quarter net profit of $891 million in a Reuters poll.

It expects to book an after-tax loss of less than $200 million in the fourth quarter after the sale of its U.S. life insurance arm, Aurora National Life Assurance Company.

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