Swiss Re third-quarter profit declined due to lower income at property and casualty and amid difficult market conditions.
Swiss Re, the world's second-largest reinsurer, had a third-quarter profit of $1.18 billion, down from $1.4 billion in the same period of 2015, the company said in a statement today. Despite the drop, the result exceeded the average analyst expectations of $927 million.
The drop in profit came after a series of agricultural losses in Europe, lower prior-year development and as a result of the softening market conditions, the Zurich-based company said. Property and casualty, the biggest unit at Swiss Re, had a profit of $678 million, compared with $1.02 billion a year ago.
Strong Earnings – Despite the Drop
«We delivered strong earnings in the first nine months, despite a continued difficult environment across the entire industry,» said Swiss Re Chief Executive Christian Mumenthaler in the statement.
Swiss Re had a very successful 2015, because comparatively few natural disasters demanded payouts from the reinsurer. The third quarter of this year also was little affected by natural catastrophes – apart from the agricultural problems in Europe.
Jump in Premium Income
The combined ratio of premiums earned to damages and administration costs at property and casualty worsened to a level of 87.9 percent from 77.7 percent a year ago. Group premiums increased to $8.6 billion from $7.85 billion a year ago. Analysts had expected a combined ratio of 91 percent.
The annualized return on investments in the third quarter was 3.5 percent, compared with 3.2 percent a year earlier and the net operating margin was 16.2 percent from 20.5 percent a year ago.
Share Buy-Back
Swiss Re today will start a share buy-back program agreed by the annual general meeting in April worth 1 billion Swiss francs, returning excess capital to shareholders.
