The world's second-biggest reinsurer, Swiss Re, said first-quarter profit increased 22 per cent as higher investment income countered claims from the Chile earthquake and European winter storm.
Net income rose to $158 million from $130 million in 2009, the Zurich-based company said in a statement today, beating the $139 million average estimate of analysts.
Swiss Re estimates its losses from the February 27th Chile earthquake at $500 million while the winter storm which crossed Western Europe in late February, cost $100 million.
The reinsurer said its excess capital increased to $12 billion as the reinsurer bids to regain its "AA" credit rating and repay Warren Buffett the $3 billion injected by Berkshire Hathaway.
"The only thing that matters is the excess capital because the outlook for the core business isn't very exciting," said Tim Dawson, an analyst at Helvea in Geneva who has a "neutral" recommendation on the stock.
"They could start buying back shares by the end of this year." The planned redemption of the Berkshire Hathaway injection is a buyback, chief financial officer George Quinn said on a conference call from Zurich. "Once we get through that, we will determine whether further steps are warranted," he said. "We have a problem, in the positive sense, with excess capital, and wouldn't announce anything before the Berkshire Hathaway issue is dealt with."
Catastrophe Claims Total claims from the Chile temblor may be as high as $7 billion with losses of as much as €2.5 billion from the winter storm, according to larger rival, Munich Re.
Hannover Re, Germany's second-biggest reinsurer, reported a 31 per cent decline in first-quarter profit on May 4th on higher catastrophe claims. Swiss Re estimates its loss from the explosion of the Deepwater Horizon drilling rig off the Louisiana coast last month to be $200 million before tax and expects the total insured market loss of the disaster to be between $1.5 billion and $3.5 billion.
"We continued to deliver strong underlying performance, even though the result was impacted by high natural catastrophe losses," chief executive Officer Stefan Lippe said in the statement.