Swiss Re reports strong P&C results for 2008 Q2, despite lower investments

Swiss Re has reported a 2008 Q2 net income of CHF600 million (Cdn$592.7 million) for the second quarter of 2008.
Return on equity was equivalent to an annualized rate of 8.5% for the quarter and 8.4% for the half year.
In the property casualty segment specifically, Swiss Re generated a combined ratio of 92.3%. Its operating income was CHF800 million (Cdn$790.2 million), despite sharply lower investment return allocation in the quarter.
“The continued strong performance of property and casualty and life and health demonstrates our ability to generate healthy operating earnings, even in challenging market conditions,” Swiss Re CEO Jacques Aigrain said in a press release. “The financial market turbulence continues, but, despite this, we are strongly capitalized and our investment portfolio remains sound.”
Swiss Re noted its unrealized mark-to-market loss on the structured credit default swaps in run-off was CHF362 million (Cdn$357.6 million) for the quarter.
“While this business is in run-off, Swiss Re continues to be exposed to market value fluctuations on the underlying securities and estimates mark-to-market losses on the structured credit default swaps in run-off of CHF163 million (Cdn$161 million) for the month of July 2008,” the company observed.
“The difficult market environment also creates new opportunities,” Aigrain noted.
He noted Swiss Re agreed to acquire Barclays Life Assurance Company Ltd. for a cash purchase price of GBP753 million (Cdn$1.54 billion). As a result of the move, Swiss Re will acquire approximately 760 000 life insurance and pension policies, as well as annuity contracts, representing approximately GBP6.8 billion (Cdn$13.9 billion) in invested assets.
In addition, he pointed to Swiss Re’s latest securitization, the US$150 million of multi-peril natural catastrophe protection through the Vega capital program.