Swiss Re has reported net income of $1.23bn for the first quarter of 2014, down from $1.38bn in the same period last year. Premiums earned and fee income rose to $7.55bn, from $6.78bn. The return on equity declined to 14.9%, from 16.6%. The company said that it remained on track to reach its 2011 to 2015 financial targets.
Swiss Re chief executive Michel Liès said that he was pleased with the performance of the group. "P&C Re had another remarkable quarter. L&H Re wrote significant profitable new business, and while the US GAAP result is below expectations, we are making good progress in strengthening the underlying business. Corporate Solutions continued growing profitably in the quarter and Admin Re has become a solid and steady cash generator for the Group".
He added that "I always stressed that meeting our financial targets for 2011 to 2015 is the top priority. We have now seven more quarters to go and we are firmly on track."
Group chief financial officer David Cole noted that "the momentum that we generated over the past few years has continued into the first quarter of 2014. The strong combined ratios posted by Reinsurance and Corporate Solutions reflect our strong commitment to underwriting and the result in asset management highlights the strengths of our well-positioned investment portfolio. Meanwhile, our capital management remains unchanged – we aim to pay an attractive regular dividend and to deploy capital to profitable business opportunities."
In Property & Casualty Reinsurance, premiums earned rose to $3.81bn, from $3.53bn. Net income was roughly flat at $1.00bn. The combined ratio deteriorated to 78.8%, from 69.7% in the same period last year. The RoE of 29.8% compared with an RoE of 35.5% in Q1 2013. Swiss Re said that the higher combined ratio reflected a higher impact of man-made losses and lower reserve releases.
In Life & Health Reinsurance premiums earned and fee income for the quarter was $2.67bn, up from $2.31bn in Q1 2013. Net income fell to $51m, from $222m. The RoE declined to 2.8%, from 3.9% in the same period last year. Swiss Re said that the deterioration in the bottom line was the result of a loss on an interest rate hedge. The decline in the operating margin – to 9.6% from 13.6% – was mainly attributable to a gain of recaptured business in Q1 2013. Swiss Re said that its management remained committed to strengthening the profitability in L&H Re and that it had already made good progress in addressing the challenges posed by the pre-2004 US portfolios. The company said that the life and health reinsurance division was on track to reach its goal of between 10% and 12% RoE by 2015.
The Corporate Solutions division had earned premiums of $830m, up from $613m, and generated net income of $80m, down from $101m in Q1 2013. The fall was attributed mainly to higher man-made losses and to higher claims from business written in prior years. The combined ratio deteriorated to 95.2%, from 87.6%, while the return on equity fell slightly, to 12.0% from 13.1%
The Admin Re solutions division reported earned premiums of $236m, down from $322m in Q1 2013, with net income falling to $48m, from $78m. The decline was attributed mainly to a less favourable UK capital markets performance. The RoE fell to 3.2%, from 4.8%.
The company said that the April treaty renewals increased in volume by 14%, "with prices still at attractive levels". Swiss Re said that it had "successfully diversified its portfolio through tailored large transactions, writing less natural catastrophe business and expanding into casualty, which has seen profitable growth across all regions".
Meanwhile, Swiss Re has announced that Patrick Raaflaub will be joining Swiss Re as Group Chief Risk Officer, becoming a member of the Group Executive Committee and Group CRO on September 1 2014. Raaflaub had a long career at Swiss Re before becoming chief executive of regulatory body FINMA in2009.