Swiss Re remains focused on economic profit growth ahead of January 2008 renewal; financial market turmoil likely to have modest positive impact on demand
10 September 2007, Zurich
Swiss Re will continue to remain focused on economic profit growth, at the expense of premium volume, if necessary. Swiss Re is well positioned for the upcoming renewals in January 2008, due to its broad client base, well diversified book of business and financial strength.
The industry is expected to deliver solid results in 2007. However, Swiss Re estimates that in 2007 claims for the industry from natural catastrophes will amount to roughly USD 35 billion, well above a benign 2006 with USD 12 billion in natural catastrophe claims, continuing the long-term trend towards high natural catastrophe claims. The recent capital market volatility re-emphasises the value of reinsurance as an effective measure for risk diversification and this will have modest positive consequences for demand.
There are many positive signs of a continued commitment to underwriting discipline. In 2007 alone, insurers and reinsurers announced the return of approximately CHF 45 billion to shareholders in the form of share buy-backs, including CHF 6 billion from Swiss Re. Furthermore, the advent of Solvency II as a regulation favoring a more transparent risk management approach, will further drive reinsurance buying behaviour. Despite this, prices in some lines, most notably in some areas of US casualty, have declined to levels that do not support the required returns for shareholders.
At today's media conference at the start of the Rendez-vous de Monte Carlo, the annual insurance conference, Jacques Aigrain, Chief Executive Officer of Swiss Re, said: "While the overall market conditions remain good and clients continue to place a premium on their relationships with Swiss Re, we will not hesitate to re-allocate our resources to those areas where we can earn the most attractive returns. We believe that our consistent underwriting approach, risk management expertise and capital market capabilities place us in a favourable position to offer attractive solutions to our existing and future clients."
Notes to editors
Swiss Re is the world's leading and most diversified global reinsurer. The company operates through offices in more than 25 countries. Founded in Zurich, Switzerland, in 1863, Swiss Re offers financial services products that enable risk-taking essential to enterprise and progress. The company's traditional reinsurance products and related services for property and casualty, as well as the life and health business are complemented by insurance-based corporate finance solutions and supplementary services for comprehensive risk management. Swiss Re is rated "AA-" by Standard, Poor's, "Aa2" by Moody's and "A+" by A.M. Best.
Cautionary note on forward-looking statements
Certain statements contained herein are forward-looking. These statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to a historical fact or current fact. Forward-looking statements typically are identified by words or phrases such as 'anticipate', 'assume', 'believe', 'continue', 'estimate', 'expect', 'foresee', 'intend', 'may increase' and 'may fluctuate' and similar expressions or by future or conditional verbs such as 'will', 'should', 'would' and 'could.' These forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause Swiss Re's actual results, performance, achievements or prospects to be materially different from any future results, performance, achievements or prospects expressed or implied by such statements. Such factors include, among others:
- the impact of significant investments, acquisitions or dispositions, and any delays, unexpected costs or other issues experienced in connection with any such transactions, including, in the case of acquisitions, issues arising in connection with integrating acquired operations;
- cyclicality of the reinsurance industry;
- changes in general economic conditions, particularly in our core markets;
- uncertainties in estimating reserves;
- the performance of financial markets;
- expected changes in our investment results as a result of the changed composition of our invested assets or changes in our investment policy;
- the frequency, severity and development of insured claim events;
- acts of terrorism and acts of war;
- mortality and morbidity experience;
- policy renewal and lapse rates;
- changes in rating agency policies or practices;
- the lowering or withdrawal of one or more of the financial strength or credit ratings of one or more of our subsidiaries;
- changes in levels of interest rates;
- political risks in the countries in which we operate or in which we insure risks;
- extraordinary events affecting our clients, such as bankruptcies and liquidations;
- risks associated with implementing our business strategies;
- changes in currency exchange rates;
- changes in laws and regulations, including changes in accounting standards and taxation requirements; and
- changes in competitive pressures.
These factors are not exhaustive. We operate in a continually changing environment and new risks emerge continually. Readers are cautioned not to place undue reliance on forward-looking statements. We undertake no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.
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