Swiss Re and Allianz post solid underwriting profits
Two of Europe’s largest re/insurance institutions posted solid 2012 results this week with both boasting healthy underwriting profits and solid combined ratios. Their results suggest the recent retrenchment of the industry to focus on underwriting profitability is paying dividends while a more moderate year in terms of catastrophe losses has also helped.
Swiss Re made a net profit of $4.2 billion compared with $2.6 billion in 2011, the growth driven partly by premium growth and fee income to $25.4 billion from $22.2 billion and favourable prior-year development in its property/casualty business.
Its group combined ratio dropped to 83.1 per cent, much lower than the 94 per cent projected while its underlying combined ratio adjusted for prior year reserve releases and slightly lower than expected natural catastrophe losses was 91.1 per cent.
The company also posted a solid investment return of $4.5 billion for the year, with a return on investments of 4 per cent. On the back of these results, the company said it would increase its regular dividend to shareholders to SFr3.50 per share and also give an additional special dividend of SFr4 per share.
“This result shows that our strategy is effective and that we remain well on our way to achieving our 2011-2015 financial targets,” said Michel Liès, Swiss Re's Group Chief Executive Officer. “We have seen a particularly strong performance in our P&C Re business and our investment results were excellent.”
Allianz Group also reported strong results, its revenues increasing to €106.4 billion for the year, an increase of 2.7 percent compared to €103.6 billion in the previous year. Its operating profit rose 20.8 per cent in 2012 to €9.5 billion from €7.9 billion in 2011 while its net income attributable to shareholders more than doubled to €5.2 billion compared with €2.5 billion in 2011, an increase of 103.1 percent. Its combined ratio was 96.3 per cent for the year, an improvement on the 97.8 per cent it posted last year.
“Our business had developed so well for the first three quarters that we raised our operating profit outlook. Despite the impact from the storm Sandy, we exceeded our forecast,” said Michael Diekmann, CEO of Allianz. “Our results show how well our business model can handle the various turbulences from the financial crisis.”
Both companies said that on the property/casualty side of their businesses they had benefitted from both overall growth and better margins on their books of business, this in part helped by fewer big catastrophe losses last year. “Premiums rose in nearly all markets with significant growth in Australia, the global unit Allianz Global Corporate & Specialty and the Latin America region,” Diekmann said.
