18 February 2010
Published in: Corporate strategy, Capital - models, Investment risk
Swiss Re returns to profit
Swiss Re announced a full year return to profit today, reporting a net income of SwFr 506m [€345m] for 2009 and SwFr 403m [€275m] for the fourth quarter. This compares to 2008 when the reinsurer reported losses of SwFr 864m [€590m] for the full year and SwFr 1.7bn [€1.2] for the fourth quarter.
Stefan Lippe, Swiss Re's CEO, said: "We have come a long way. First, we have fully restored our capital position. Second, we have significantly de-risked and strengthened our balance sheet. And third, we have maintained the strong earnings power of our core business through underwriting profitability and cost discipline throughout the group."
Swiss Re said its estimated excess capital above an AA capital requirement is more than SwFr 9bn [€6bn]. "Our declared priority is to regain AA rating", it said in a statement. Reflecting the optimism from the restored capital strength, the board of directors has proposed to increase shareholder's dividend to SwFr 1.00 [€0.68].
The company has significantly de-risked and strengthened its balance sheet and says its legacy run-off is ahead of schedule. It has "terminated substantially all of its exposures in the portfolio credit default swaps (CDS), and liquidated several positions from the former structured CDS. "Financial Guarantee Re exposure was significantly reduced by the commutation of SwFr 9.2bn [€6.3bn] notional protection," the statement continued.