Swiss Re surprises with Q2 profit, sees price rises
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ZURICH (Reuters)—Swiss Re Ltd., the world's second-largest reinsurer, beat expectations with a second-quarter profit and struck an upbeat note for the months ahead, saying policy prices were rising.
The Zurich-based firm reported on Thursday a net profit of $83 million. Analysts polled by Reuters had expected a loss of $119 million, due in part to the firm's sale of its U.S. holding company Reassure America Life Insurance Co. to Jackson National Life Insurance Co. in late May.
Yet a release of capital reserves, a good return on investments and the absence of large natural catastrophe claims helped Swiss Re boost its bottom line.
Swiss Re said its July policy renewals round had seen increases in both prices and premium volume.
"The trend of increasing prices is expected to continue," Chief Executive Michel Lies added.
Huge natural catastrophes in 2011, including a Japanese earthquake and flooding in Thailand, are allowing insurers, who for years have been grappling with low bond yields, to charge higher prices on property and casualty policies.
Swiss Re said it had seen prices rise in New Zealand and Australia, which have been hit by earthquakes and severe flooding in recent years and which constitute about 20% of the firm's premiums.
Since the start of the year, premium volumes had risen an estimated 24%, the firm said.
German rival Munich Re, the world's biggest reinsurer, sounded similarly upbeat this week, expecting to beat its 2012 net profit goal after rising premiums and better underwriting boosted earnings.
Yet because of the U.S. unit sale, Swiss Re missed its financial targets in the second quarter, falling short both of its earnings-per-share growth goal and its objective of achieving a return on equity of 700 basis points above the risk free average between 2011 and 2015.
Mr. Lies said achieving those targets remained a top priority.
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