Swiss Re reports net loss of $665m

Annualised return on equity decreased to -10.7% compared to 2.7% for the first quarter of 2010. Earnings per share also decreased to CHF -1.84 ($ -1.94), compared with CHF 0.49 ($0.46) for the first quarter of 2010.

Shareholders' equity declined slightly by $0.9bn to $24.4bn. Book value per common share was CHF 65.19 (USD 71.26) at the end of March 2011, compared to CHF 68.99($74.02) at the end of December 2010.

Property & casualty was impacted by a very high level of natural catastrophe claims, including the earthquakes in Japan and New Zealand and the floods in Australia. The reinsurer said these contributed to an operating loss of US$1.2bn, compared to an operating income of UD$259m in the first quarter of 2010.

Life & health reported an operating income of US$144m in the first quarter of 2011, compared to $245m in the prior-year period. The change in operating performance was driven by less favourable mortality and variable annuity results, only partially offset by favourable morbidity experience. The benefit ratio increased to 89.4% in the first quarter of 2011.

Operating income of asset management was US$1.2bn in the reporting period, compared to US$0.9bn in the first quarter of 2010. The annualised return on investments was 4.0% in the first quarter of 2011, compared to 2.8% in the first quarter of 2010.

However, the company is confident about the future. Property & casualty treaty business written premiums grew by 5% year-on-year in the April renewals, or by 13% year to date. Historically, large losses from natural disasters have been followed by price increases and stronger demand in the Property & Casualty market. According to the reinsurer, the combination of the recent natural catastrophes, very low interest rates, and years of price declines are likely to bring forward the turn in the cycle.

Stefan Lippe, Swiss Re's chief executive officer, said: "In the first quarter of 2011, we experienced exceptionally high losses from natural catastrophes. In the renewals following these events, we maintained our focused and disciplined underwriting approach. We were able to grow our P&C treaty book by 13% year to date and to outperform the market in terms of pricing adequacy."

Mr Lippe continued: "We remain committed to our five-year targets and are confident that we can deliver. The impact of natural catastrophe losses in the first quarter creates an additional challenge but it will also accelerate the market turn we had previously expected in 2012/2013."