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Swiss Re Q1 net profit rises 17%, beats forecast

Swiss Re, the world's second-largest reinsurer, posted a forecast-beating 17 percent rise in net profit in the first quarter on Thursday, helped by strong investment returns, and said reinsurance rates remained attractive.

Swiss Re and other reinsurers help insurance companies cover the cost of major damage claims, such as for hurricanes or earthquakes, in exchange for part of the premiums their insurance company clients pay.

Pension funds and other specialised investors have been pouring money into the reinsurance business, competing with traditional reinsurers like Munich Re and Swiss Re, and putting pressure on prices.

But Swiss Re said the April policy renewal season had shown that despite a softening in property catastrophe rates, prices overall were attractive.

"The first quarter has seen all business units deliver a very good start to the year," Chief Financial Officer David Cole said in a statement.

"We've also been able to achieve a strong investment result despite ongoing low interest rates amid an environment of financial repression."

The Swiss Re building in Zurich is shown in this Feb. 19, 2009 photo.
Christian Hartmann | Reuters
The Swiss Re building in Zurich is shown in this Feb. 19, 2009 photo.

Swiss Re's net profit rose 17 percent to $1.4 billion from a year earlier, beating an average forecast for $961 million net profit in a Reuters poll of eight analysts.

The group said it was on track to meet its 2011-2015 financial targets by the end of the year.

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Swiss Re's property catastrophe combined ratio for the first quarter, a measure of underwriting profitability, was 84.4 percent, against a Reuters poll average of 86.4 percent. A figure below 100 percent indicates a profit.

Annualized return on investment rose to 3.9 percent in the first three months of the year, from 3.7 percent a year earlier.

Premiums earned and fee income was flat at $7.6 billion.