Swiss Re’s first-quarter profit declined by half after a storm caused massive damages in Australia.
Cyclone Debbie is the main reason for the decline in profit at Swiss Re, the world’s second-largest reinsurer after Munich Re. Damages amounting to about $350 million caused the company’s profit to decline by about half to $656 million, which compares with a profit of $1.23 billion a year earlier. Still, analysts had expected damages to be even higher.
The Zurich-based company also posted an 11 percent drop in gross premiums written for the quarter, declining to $10.2 billion. Swiss Re said this was due to a disciplined underwriting approach.
Continued Pricing Pressure
«We have responded decisively to the continued pricing pressure across the industry by not accepting unprofitable business, and our top line clearly shows that,» said Christian Mumenthaler, Swiss Re’s CEO, according to a statement.
The combined ratio increased 2.3 percentage points to 95.6 percent. The figure increased to 99.6 percent at the Corporate Solutions divisions, up from 90.4 percent.
Common shareholders’ equity increased slightly to $35.1 billion from $34.9 billion. Return on equity meanwhile was down to 7.5 percent from 14.6 percent a year ago.
Return on Investments Declines
«The satisfactory result in the first quarter demonstrates our ability to deliver in a difficult market environment while we continue to invest in building the long-term value of our businesses,» said David Cole, Swiss Re’s CFO.
The annualized return on investments fell to 3.4 percent from 3.7 percent in the same period of 2016.
Premium Volume at Renewals
In the April treaty renewals, when the Asian renewals are in the focus, Swiss Re maintained its underwriting discipline and reduced capacity in business which did not meet its profit expectations, the company said. Premium volume decreased 2 percent. The year-to-date risk-adjusted price quality remains at 101 percent.
Swiss Re for the first time in a quarterly statement reported the key figures for the group only. The company abstains from the more extensive quarterly reporting and investor presentations.
