Natural disasters this summer are expected to weigh heavily on Swiss Re, costing the company about SFr1.21 billion ($1.02 billion) for the year as a whole.This content was published on August 7, 2007 - 11:14
However, the world's largest reinsurer by premiums says the outlook for the rest of the year remains strong, assuming an average level of natural catastrophes.
The second half of each year is usually the costliest for reinsurers because of the United States hurricane season.
Swiss Re, which is based in Zurich, said on Tuesday the estimated 2007 costs compared with SFr1.09 billion for 2006, when there were fewer catastrophes.
Net premiums in the natural catastrophe business this year are SFr1.91 billion.
The most expensive bill for the company so far this year is expected to come from the storm "Kyrill", which swept across North Europe in January. It is likely to saddle Swiss Re with costs of SFr230 million.
The latest floods and storms in Britain are expected to cost SFr100 million, the June storms and floods in Australia SFr150 million and typhoon "Gonu" that hit Iran SFr50 million.
Zurich Financial Services estimated earlier this month that claims from the bad weather in Britain would not exceed $400 million.
Swiss Re published the details as it announced a second-quarter net profit of SFr1.2 billion, up 45 per cent from SFr825 million in 2006.
This figure was boosted by Swiss Re's acquisition of General Electric's reinsurance operations last year.
Net profit was SFr1.3 billion for the first quarter of the year, lifted by SFr268 million from the sale of its distinctive "Gherkin" office building in London.
Swiss Re said its combined ratio – an insurance industry benchmark that compares costs and claims with premium income – sank 90.7 per cent from 93.9 per cent. A level below 100 per cent means the business is profitable.
"We are pleased with the results for the second quarter as we continued to generate economic profit growth through careful cycle management and efficient capital allocation," said company chief executive Jacques Aigrain in a statement.
Swiss Re said it continued to develop new products to meet the rising demand for natural catastrophe protection and for its engineering, weather, agricultural and marine businesses.
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Swiss Re, based in Zurich, is the world's largest reinsurer, which is basically the business of insuring the insurers.
Founded in 1863, it operates through offices in more than 30 countries.
It made a net profit in 2006 of SFr4.6 billion, double that of the previous year.
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