BREAKING NEWS ALERT
Swiss Re reveals $32mn satellite loss as P&C soars
Swiss Re has indicated in a presentation to analysts following its 2012 results that it is expecting a $32mn loss from the launch failure of the Russian Zenit-3SL rocket on 1 February.
The rocket was carrying an Intelsat-27 satellite which is understood to have been insured on an Aon-placed programme, widely placed through the space (re)insurance market, with a significant line also understood to have been taken by Munich Re.
Swiss Re's 2012 results, released yesterday, indicated a significant increase in underwriting profitability for ITS P&C reinsurance business, with a combined ratio of 80.7 percent compared with 104 percent a year ago.
The improvement was driven by lower catastrophe losses, which added only 1.3 percentage points to the combined ratio, compared to an annual budget of 9.3 percentage points. This contrasted with the cat-heavy 2011 when the total cat loss was 24 percentage points above budget.
The reinsurer's previous estimate of a $900mn loss in the fourth quarter of 2012 for Hurricane Sandy remained unchanged.
The reduction in cat losses helped to offset a slight decline in the positive contribution of prior-year reserves, which improved the combined ratio by 8.1 percentage points in 2012 compared to 11 percentage points a year earlier.
The unit contributed $3bn of net income - almost treble the $1.1bn it reported in the catastrophe-heavy 2011. The standalone P&C 2012 return on equity was equivalent to 26.7 percent.
The result was driven by a 21.6 percent increase in net earned premiums to $12.3bn, improved margins, realised gains and prior year reserve releases, the reinsurer said.
Swiss Re's appetite for growing its P&C reinsurance premium base was again demonstrated by growth at the 1 January renewals, with treaty premium up 11 percent to $9.3bn.
This was driven by solvency relief-style transactions in Europe and the Americas, although the company said it had also deployed more catastrophe and casualty capacity.
The group said prices had increased 2 percent across its portfolio after accounting for claims inflation, rate and exposure changes. However, after accounting for the impact of the weaker investment yields available, the portfolio renewed flat on an economic basis.
Swiss Re's net premium income from P&C operations will also be significantly boosted in 2013 by the lapse of its five-year 20 percent quota share with Berkshire Hathaway, which expired in December.
At a group level the P&C combined ratio, which includes reinsurance and corporate solutions, was 83.1 percent compared to 104.7 a year earlier. This was better than the 94 percent that was forecasted.
Stripping out the effect of catastrophes and reserve releases, the underlying group combined ratio was 91.1 percent.
Net investment income was $4.5bn across all of its divisions, which included net realised gains of $1.5bn.
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