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Swiss Re Second-Quarter Net Profit Up 45%, Meets Forecasts

Reuters
Tuesday, 7 Aug 2007 | 1:35 AM ET

Second-quarter net profit at Swiss Re rose by 45%, in line with expectations, and the reinsurer said on Tuesday it saw a strong outlook for the rest of the year.

Net profit was 1.194 billion Swiss francs (US$1.01 billion), the world's largest reinsurer said on Tuesday, up from 825 million a year ago, boosted by its $7.4 billion acquisition of General Electric's reinsurance operations last year.

"Assuming an average level of natural catastrophes, the outlook for the rest of the year remains strong," Chief Executive Officer Jacques Aigrain said in a statement.

The second half of each year is usually the costliest for reinsurers, because of the U.S. hurricane season.

The average expectation for net profit in a Reuters poll of 14 analysts was 1.253 billion francs. Swiss Re is issuing quarterly figures for the first time this year.

Net profit was 1.3 billion francs in the first quarter of the year, boosted by a 268 million-franc windfall from the sale of its "Gherkin" office building in London.

The group's combined ratio -- which measures claims and costs against premium income -- improved to 90.7%, indicating healthy profitability, from 93.9% a year ago.

Munich Re, Swiss Re's main competitor, raised its 2007 earnings target on Monday after its second-quarter results beat forecasts, helped by lower taxes.

Swiss Re is a preferred stock for many analysts given its relatively low valuation and a perception it is poised for faster growth after former investment banker Jacques Aigrain took over the helm at the start of last year.

Swiss Re shares trade at 7.6 times expected 2008 earnings, compared to 8.2 times for Munich Re and 7.8 times for France's Scor, according to Reuters data.

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