Swiss Re’s net income drops in 2005

Swiss Re reported a drop in net income to CHF1.5 billion (CDN$1.3 billion) in 2005 from CHF2.5 billion (CDN$2.17 billion) in 2004.
In 2005, Swiss Re digested CHF3 billion (CDN$2.61 billion) in large natural catastrophe claims, up from CHF1.2 billion (CDN$1.04 billion) in 2004.
The combined ratio for Swiss Re’s entire non-life business was 108.7%, the company reported in a press release. Premiums earned declined 6% to CHF27.8 billion (CDN$24.18 billion), which Swiss Re attributes to a focus on profitability rather than volume growth. The investment result increased 11% to CHF6.6 billion (CDN$5.74 billion), achieving a 5.7% return on investment.
The performance of Swiss Re’s property and casualty business “reflected the extraordinary year for natural catastrophes claims,” the company stated in a press release. The company’s operating income declined to CHF1 billion (CDN$870 million), and premiums earned declined 11% to CHF16.4 billion (CDN$14.3 billion).
“The reduction in volume was due both to Swiss Re’s actions to cut business not meeting its pricing requirements, as well as to clients retaining more of their business in 2005,” the company reported.
Swiss re CEO Jacques Aigrain said: “2005 has been a year of contrasts. Swiss Re has benefited from its well diversified business to absorb an unparalleled sequence of exceptionally large natural catastrophe events.”
Swiss Re noted in its release that, despite the largest claims on record for natural catastrophe events, shareholders’ equity increased 20% to CHF22.9 billion (CDN$19.9 billion). Reflecting both lower net income and increased shareholders’ equity, return on equity declined to 6.7%.