Swiss Re Reports Q1 Net Income Drops 53% to $592 Million

Swiss Re reported a sharp drop of 53 percent in net income for the first quarter of 2008. The world’s largest reinsurer earned CHF 624 million ($592.4 million) for the period, compared to the CHF 1.329 billion ($1.261 billion) it posted for Q1 2007.

Swiss Re said the “reduction was attributable to the continuing turmoil in the financial markets and the resulting additional mark-to-market loss of CHF 819 million [$777.5 million] on the structured credit default swaps in run-off since November 2007.”

The bulletin added that the result was “partially offset by a strong performance from Asset Management,” and that P/C and life and health sectors had “delivered satisfactory results.”

Earnings per share were CHF 1.84 ($1.746). The annualized return on equity (ROE) was 8.5 percent, down from 17.1 percent in the same period last year.

In the P/C sector Swiss Re posted operating income of CHF 1.3 billion ($1.234 billion), a decrease of 6 percent compared to Q1 2007. “The combined ratio was up 3.1 percentage points to 96.9 percent compared to the first quarter of 2007, mainly due to property business which was impacted by higher man-made losses and lower premium volumes,” said the bulletin.

Swiss Re also noted that the strong Swiss franc – up 12 percent against both the U.S. dollar and the British pound – “”affects “the comparison of year-on-year reported income.”

Total revenues for the period were down by 40 percent to CHF 6.947 billion ($6.6 billion) from CHF 11.633 billion ($11 billion) in Q1 2007. Premiums earned declined by 20 percent to CHF 6.457 billion ($6.14 billion) from CHF 8.091 billion ($7.696 billion). The decline was mainly due to the ongoing commitment to underwriting discipline, currency fluctuations and the quota share treaty negotiated with Berkshire Hathaway, Swiss Re explained.

CEO Jacques Aigrain commented: “Despite the continuing turmoil in the financial markets, we remain confident in our earnings power and our ability to maximize shareholder returns. Our capital position is strong and our insurance related portfolio is sound. While we face challenging conditions, we are well prepared and will not deviate from our sharp focus on underwriting quality, careful risk selection and economic profit growth.”

Swiss Re will hold an analysts conference call this afternoon at 14.00 European time (8:00 a.m. EST) Access can be obtained by dialing the following numbers 10 minutes prior to the start of the call:
From Switzerland: +41 (0) 44 800 9659
From Germany: +49 (0) 69 9897 2631
From France +33 (0) 1 70 99 4272
From UK: +44 (0)20 7138 0814
From US: +1 718 354 1359

The full earnings report, additional information and slides of the presentation may be obtained on the Company’s web site at: www.swiss.re.com.

Source: Swiss Re