Swiss Re reported net income of CHF 624 million for the first quarter of 2008. Earnings per share fell 52% to CHF 1.84 over the same period of last year. Return on equity was equivalent to an annualised rate of 8.5% compared to 17.1% in the first quarter 2007.
Shareholders' equity decreased 13% to CHF 27.8 billion compared to 31 December 2007 due to the depreciation of the US dollar against the Swiss franc, mark-to-market effects on the investment portfolio and the continued buy-back of shares. As of the end of the first quarter, Swiss Re's share buy-back reached CHF 3.26 billion, with 42% of its announced CHF 7.75 billion target completed. Book value per share was down 9% to CHF 83.26.
Property & Casualty continued its solid performance. Operating income was CHF 1.3 billion, a decrease of 6% compared to the first quarter of 2007, reflecting strict underwriting across all lines of business. The combined ratio was up 3.1 percentage points to 96.9% compared to the first quarter of 2007, mainly due to property business which was impacted by higher man-made losses and lower premium volumes.
Life & Health generated an operating income of CHF 449 million, representing a decrease of 45% compared to a very strong first quarter in 2007. While the result benefited from Admin Re(R) as well as variable annuity and longevity business acquired in 2007, it was impacted by lower proprietary net realised investment gains.
Financial Markets generated an operating income of CHF 1.4 billion. In a generally difficult market environment, the structured credit default swaps in run-off generated an additional mark-to-market loss of CHF 819 million in the first quarter. While this business is in run-off, Swiss Re continues to be exposed to market value fluctuations on the underlying securities and we estimate a further loss of CHF 200 million for the month of April. The annualised return on investments, which excludes the mark-to-market loss on the structured credit default swaps, was 5.8%, up 0.4 percentage points compared to the first quarter of 2007.
Jacques Aigrain, Swiss Re's Chief Executive Officer, said: "Despite the continuing turmoil in the financial markets, we remain confident in our earnings power and our ability to maximise shareholder returns. Our capital position is strong and our insurance related portfolio is sound. While we face challenging conditions, we are well prepared and will not deviate from our sharp focus on underwriting quality, careful risk selection and economic profit growth."
Swiss Re maintains its targets of earnings per share growth of 10% and return on equity of 14% over the cycle.
Together with the release of its first quarter 2008 results, Swiss Re also disclosed its 2007 results based on its Economic Value Management (EVM) model. EVM is Swiss Re's integrated economic measurement and steering framework used for planning, pricing, reserving and managing its business. The 2007 EVM results can be found at: http://www.swissre.com/
Notes to editors
Swiss Reinsurance Company Ltd
Swiss Re is a leading and highly diversified global reinsurer. The company operates through offices in more than 25 countries. Founded in Zurich, Switzerland, in 1863, Swiss Re offers financial services products that enable risk-taking essential to enterprise and progress. The company's traditional reinsurance products and related services for property and casualty, as well as the life and health business are complemented by insurance-based corporate finance solutions and supplementary services for comprehensive risk management. Swiss Re is rated "AA-" by Standard & Poor's, "Aa2" by Moody's and "A+" by A.M. Best.
Contact:
Eileen Lim
Corporate Communications, Asia
Swiss Re
Tel: +852-2582-3660
SOURCE Swiss Re