Swiss Re Reports a Net Loss of CHF 304 Million for the Third Quarter of 2008
ZURICH, Nov. 4 /Xinhua-PRNewswire-AsiaNet/ --
Net Operating Income of CHF 884 million for the First Nine Months of 2008
Book Value Per Share of CHF 74.16
Swiss Re reports a net loss of CHF 304 million for the third quarter of 2008.
Despite unprecedented turmoil in the global financial markets, net operating
income for the first nine months of 2008 was CHF 884 million. Book value per
share was CHF 74.16 at the end of September 2008. Swiss Re's balance sheet is
strong, and the company's capital adequacy remains at very high levels.
Swiss Re reports a net loss of CHF 304 million for the third quarter of 2008.
Despite the severe market circumstances, Swiss Re earned CHF 884 million during
the first nine months of 2008. Earnings per share were CHF -0.93 for the third
quarter and CHF 2.66 for the first nine months of 2008. Return on equity was
equivalent to an annualised rate of -2.7% for the quarter and 6.4% for the first
nine months of 2008.
As a result of the company's prudent investment approach, shareholders'
equity decreased only 6% in the third quarter to CHF 24.1 billion compared to the
second quarter of 2008. Book value per share decreased modestly to CHF 74.16 at
the end of September 2008, compared to CHF 77.65 at the end of June 2008.
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 programme. At the end of October 2008, the Group had completed
51.2% of its CHF 7.75 billion share buy-back programme. Swiss Re can still meet
the completion of the programme 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.
Operating income in Property & Casualty decreased to CHF 99 million, mainly
as a result of lower investment returns, selective underwriting as well as
materially higher natural catastrophe claims. Excluding realised gains and
losses, the operating result declined to CHF 710 million in the third quarter of
2008 compared to CHF 1.8 billion in the second quarter of 2008. The combined
ratio was 99.8% for the quarter (97.6% excluding the unwind of discount) and
96.4% for the first nine months of 2008 (94.4% 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 remains focused on underwriting quality versus quantity to ensure shareholder
value is maximised. Should the early indicators of market hardening be confirmed,
Swiss Re will redirect capital to Property & Casualty.
On 23 September 2008, Swiss Re communicated a preliminary net claims estimate
for hurricane Ike of USD 250 million. Swiss Re now estimates these net claims to
be USD 315 million due to indications of higher insured claims in the U.S.
Midwest, and offshore energy. Estimates for hurricane Gustav remain unchanged.
Swiss Re expects its aggregated net claims for hurricanes Gustav and Ike to be
approximately USD 365 million.
In Life & Health, operating income decreased to CHF -614 million in the third
quarter of 2008. The main drivers were net realised investment losses of CHF 572
million due to financial market turmoil and higher mortality in North America.
Overall, mortality developments in the first nine months of 2008 were in line
with expectations. During the same period, operating income was CHF 392 million.
Excluding realised investment losses, the operating result for the quarter
declined to CHF 22 million from CHF 868 million in the second quarter of 2008.
Annualised return on investments was 1.6% for the quarter and 3.4% for the
first nine months of 2008. The return on investments was mainly impacted by
realised and unrealised mark-to-market losses, as well as the cost of hedging.
Swiss Re's investment portfolio is of high quality and well diversified with over
50% in cash, short-term deposits, treasury bills or government-backed
instruments. During the third quarter of 2008, the Group significantly reduced
its exposure to corporate credit through hedging. Similarly, the traded equity
portfolio was reduced through disposals and hedges.
The unrealised mark-to-market loss on the structured credit default swaps was
CHF 289 million for the quarter.
Jacques Aigrain, Swiss Re's Chief Executive Officer, said: "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."
He added: "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% and
return on equity of 14% over the cycle.
Notes to editors
Swiss Reinsurance Company Ltd
Swiss Re is a leading and highly diversified global reinsurer. The company
operates through offices in more than 25 countries. Founded in Zurich,
Switzerland, in 1863, Swiss Re offers financial services products that enable
risk-taking essential to enterprise and progress. The company's traditional
reinsurance products and related services for property and casualty, as well as
the life and health business are complemented by insurance-based corporate
finance solutions and supplementary services for comprehensive risk management.
Swiss Re is rated "AA-" by Standard & Poor's, "Aa2" by Moody's and "A+" by A.M.
Best.
Contact:
Corporate Communications, Asia
Tel: +852-2582-3660
Email: asia@swissre.com
Media Relations, Zurich
Tel: +41-43-285-7171
Corporate Communications, London
Tel: +44-20-7933-3445
Corporate Communications, New York
Tel: +1-212-317-5663
Investor Relations, Zurich
Tel: +41-43-285-4444
SOURCE Swiss Reinsurance Company Ltd
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