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Swiss Re profits up 18 percent

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Swiss Re profits up 18 percent
14:45 CEST+02:00

Reinsurance giant Swiss Re posted an 18 percent jump in second quarter net profit to $960 million Thursday and said it expected even better results through 2012 after cutting its exposure to weak governments' debt.

"The reinsurance market has started to turn and Swiss Re expects further improvements over the next six to 18 months," the group said in an earnings statement.

Higher demand for natural catastrophe insurance in Australia, New Zealand and the United States lifted Swiss Re's volume and prices, it noted.

Premiums were up 10 percent at $5.2 billion.

The combined ratio -- which measures profitability by taking incurred losses and expenses against earned premium -- reached 78.4 percent, a sharp improvement from the 102 percent recorded a year ago.

While the group acknowledged that market instability brought about by national debt issues remains a concern, it has cut its exposure to bonds which failed to make the top grade in credit agency ratings.

"After starting to take resolute steps from late 2009 to reduce sovereign debt exposure to non-AAA rated European government bonds, Swiss Re now holds only $78 million in sovereign debt issued by peripheral eurozone countries," it said.

Its exposure to Greek government debt is nil, it added.

Bank Vontobel analysts said Swiss Re's earnings beat their forecasts and rated the reinsurer a "positive investment case."

Zuercher Kantonalbank analysts also described the figures as solid.

Stocks in the reinsurer soared 6.35 percent to 43.71 francs in early morning trade, leading the Swiss Market Index, which was up 1.27 percent.

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