Swiss Re Reports $259 Million Q3 Net Loss: $754 Million 9-Month Profit

Swiss Re reported a net loss of CHF 304 million ($259.3 million) for the third quarter of 2008, despite what it described as “good technical results for Property & Casualty.” For the first nine months of 2008 the world’s largest reinsurer posted net operating income of CHF 884 million ($754 million).

Other earnings highlights included the following:
— Earnings (loss) per share of CHF -0.93 (79.3 cents);
— Book value per share of CHF 74.16 ($63.26)
— Return on equity of -2.7percen (annualized); or 6.4 percent (annualized) for the first nine months of 2008
— Shareholders’ equity of CHF 24.1 billion ($20.56 billion)
— Property & Casualty operating income of CHF 0.1 billion ($853 million)
— Combined ratio of 99.8 percent, or 97.6 percent excluding unwind of discount
— Life & Health operating loss of CHF 0.6 billion ($5125 million)
— Benefit ratio of 91.5 percent
— Financial Markets delivered a return on investments of 1.6 percent (annualized), or 3.4 percent (annualized) for the first nine months of 2008

Swiss Re also announced that “as a consequence of the high volatility in the financial markets and a significant increase in client demand for reinsurance, Swiss Re has suspended its share buy-back program. At the end of October 2008, the Group had completed 51.2 percent of its CHF 7.75 billion [$6.62 billion] share buy-back program. Swiss Re can still meet the completion of the program by April 2010, but this will depend on some stability returning to the capital markets and the business opportunities arising for the Property & Casualty and Life & Health divisions.”

Swiss Re said its operating income from its P/C business dropped to CHF 99 million ($84.5 million), “mainly as a result of lower investment returns, selective underwriting as well as materially higher natural catastrophe claims. Excluding realized gains and losses, the operating result declined to CHF 710 million [$606 million] in the third quarter of 2008 compared to CHF 1.8 billion [$1.54 billion] in the second quarter of 2008.

“The combined ratio was 99.8 percent for the quarter (97.6 percent excluding the unwind of discount) and 96.4 percent for the first nine months of 2008 (94.4 percent excluding the unwind of discount) despite a higher natural catastrophe burden. Swiss Re’s effective protection successfully mitigated the impact of increased natural catastrophe claims.”

Swiss Re said it “remains focused on underwriting quality versus quantity to ensure shareholder value is maximized. Should the early indicators of market hardening be confirmed, Swiss Re will redirect capital to Property & Casualty. ”

CEO Jacques Aigrain commented: “Swiss Re’s strong capital base together with our high level of diversification and the longstanding expertise of our people place us in a competitive position to benefit from the current market developments.

“Our financial strength and stability allow us to provide solutions to our clients, whether they are seeking opportunities created by today’s financial market dislocation or looking for further assistance and reinsurance support. Clients are turning to us, and we are responding.”

The Group maintains its targets of earnings per share growth of 10 percent and return on equity of 14 percent over the cycle.

The full report and additional information, as well as access to this morning’s earnings conference call may be obtained on the Group’s web site at: www.swissre.com.

Source: Swiss Re