The FINANCIAL -- Swiss Re has delivered a net income of USD 4.4 billion for 2013.
The FINANCIAL -- Swiss Re has delivered a net income of USD 4.4 billion for 2013. The result was driven by sustained, high profitability in Property and Casualty Reinsurance and very good performances by Corporate Solutions and Admin Re. Life and Health Reinsurance delivered a reduced profit due to reserve strengthening in Australia. Swiss Re's Board of Directors will propose a regular dividend of CHF 3.85 per share and, in addition, a special dividend of CHF 4.15 per share, according to Swiss Re.
Net income was USD 4.4 billion in 2013 (vs USD 4.2 billion in 2012). Premium and fee income grew by 13% to USD 28.8 billion (vs USD 25.4 billion). Solid underwriting from prior years contributed to the strong performance by the P&C businesses, as well as a number of one-off tax benefits across the Group and reserve releases totalling USD 1 billion. Net investment income, gains from alternative investments and realised gains from sales contributed to the strong investment result of USD 4.3 billion for the year, with a return on investments of 3.6% (vs 4.0%). The investment result includes the contribution from Principal Investments, a dedicated unit to generate long-term economic value via investments in insurance-related businesses.
The Group combined ratio was excellent at 85.3%. Adjusting for prior-year reserve releases and lower than expected natural catastrophe losses, the underlying combined ratio for the year was 94.6%, according to Swiss Re.
Earnings per share were USD 12.97 or CHF 12.04 (vs USD 11.85 or CHF 11.13 in 2012). Shareholders' equity was USD 33.0 billion at the end of 2013 (vs USD 34.0 billion at the end of 2012). Book value per common share was USD 93.08 or CHF 82.76 as of 31 December 2013, compared to USD 95.87 or CHF 87.76 at the end of 2012.
With the Group's capitalisation significantly exceeding all applicable solvency requirements, Swiss Re's Board of Directors is pleased to propose at the Annual General Meeting a regular dividend for 2013 of CHF 3.85 per share, up from CHF 3.50 in 2012. In addition, the Board of Directors will propose a special dividend of CHF 4.15 per share. Together, the dividend payments will result in a total return of capital to shareholders of approximately USD 3.1 billion. The payments will be made in the form of Swiss withholding tax exempt distributions out of legal reserves from capital contributions and will be made after shareholder approval at the Annual General Meeting.
P&C Re net income climbed to USD 3.3 billion in 2013 (vs USD 3.0 billion in 2012). The result was due to the combination of a strong underwriting result as well as favourable prior-year reserve development, better than expected natural catastrophe experience and one-off tax benefits, according to Swiss Re.
The P&C Re combined ratio was 83.3% in 2013 (vs 80.7%). Adjusted for expected natural catastrophes and prior-year reserve releases, the combined ratio was 93.6%.
Net earned premiums increased by 17.9% to USD 14.5 billion. The increase was mainly attributable to the expiry of a major quota share agreement, complemented by new business in the Americas.
L&H Re delivered a net income of USD 356 million for 2013 (vs USD 739 million). The lower result was due to reserve strengthening of USD 369 million for group disability business in Australia and the impact of business recaptured in the first quarter.
Premiums earned and fee income increased by 9.9% to USD 10.0 billion (vs USD 9.1 billion). The operating margin for the year was 5.2% (vs. 8.6%), mainly due to reserve strengthening for Australian group disability business.
L&H Re continues to write new business at profitable rates, including through large transactions. In the fourth quarter L&H Re won a significant new health deal in Asia, according to Swiss Re.
Corporate Solutions delivered a very strong net income of USD 279 million in 2013, or 42.3% higher than the 2012 net income of USD 196 million. Net earned premiums increased to USD 2.9 billion, supported by growth across most lines of business and the expiry of a quota share agreement. The quality of the book remained consistently high year-on-year, with the combined ratio improving to 95.1% from 96.2%.
Corporate Solutions continued to make prudent investments in organic and inorganic growth initiatives, including the strengthening of local teams in existing offices and expanding its distribution channels by obtaining a Singapore direct insurance license to further growth of the local Corporate Solutions operation.
Admin Re delivered a strong net income of USD 423 million for the full year (vs USD 183 million). In addition, gross cash generation was USD 521 million (vs USD 1.2 billion, which in 2012 included USD 804 million from the sale of the Admin Re® US business). This demonstrates the success of management actions in improving the Business Unit's operational efficiency and enhancing its contribution to the Group.