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Swiss Re first-quarter profit jumps 21%, reinsurance strong


(Reuters) — Swiss Re Ltd. on Thursday said first quarter profit rose 21%, driven by a 9% rise in premium and fee income, low catastrophe losses and the expiry of a quota share agreement with Warren Buffett's Berkshire Hathaway Inc.

The group said it was well-positioned to face uncertain economic conditions amid weak economic growth and low interest rates, confirming its financial targets for 2011-2015 and adding that April policy renewals and pricing had been strong.

"The group portfolio is fundamentally in very good shape but we will continue to focus on areas of underperformance. We will not hesitate to take decisive action to further improve overall returns," said Chief Executive Michael Lies in a statement.

The firm, which competes with Germany's Munich Reinsurance Co., recorded net profit of $1.38 billion, lifted by a strong performance from its reinsurance and corporate businesses and well ahead of estimates for $1.05 billion in a Reuters poll.

Swiss Re flagged a strong start to 2013 for its property/casualty business when it reported 2012 numbers in February.

The company said its combined ratio, an insurance industry measure of profitability weighing payouts against premium income, was 69.7% in its property/casualty arm, beating an 84.0% average poll estimate.

Reinsurers like Hannover Reinsurance Co., Munich Re and Swiss Re help insurance company customers cover the cost of major damage claims like hurricanes or earthquakes in exchange for part of the premium.

Reinsurers’ shares have climbed steadily since 2011, when huge natural catastrophes including the Japanese earthquake and tsunami and flooding in Thailand created market conditions that allowed insurers to hike property/casualty policy prices.

However, earlier this year, Hannover Re Chief Executive Ulrich Wallin said price pressure was rising due to the growing competition and to insurance companies keeping more risk on their own books, rather than offloading it onto reinsurers.

Munich Re, which reports first quarter numbers on May 7, said last week it expects to deliver a net profit of close to €1 billion ($1.30 billion). Hannover Re reports on the same day.