Swiss Re reports Q4 net profit

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Swiss Reinsurance reported a fourth-quarter net profit of 403 million Swiss francs, equivalent to about $373.4 million and a far cry from the 1.75-billion- franc or $1.6 billion loss it suffered on the back of bad investments in the year-earlier period.

Swiss Re said earnings per share were 1.18 francs compared with a loss of 5.34 francs per share in the last three months of 2008. Full-year net profit for 2009 reached 506 million francs or $470 million compared with a loss of 864 million francs the previous year. The quarterly results fell just short of analysts’ expectations.

Swiss Re shares closed 2.8 per cent higher at 48.05 francs on the Zurich exchange. CEO Stefan Lippe said the company had "come a long way,” rebuilding its capital base, purging risky holdings and restoring profitability to its core insurance business.

Last year, Swiss Re was forced to borrow three billion francs (US$2.79 billion) from U.S. investor Warren Buffett’s investment firm Berkshire Hathaway. The Zurich-based company said it was "on schedule” to repay the loan between March 2011 and March 2012.

The absence of major disasters allowed the reinsurance company to more than double operating income in its property and casualty business to 853 million francs.

Swiss Re’s combined ratio improved to 88.3 per cent compared with 104.6 per cent in the same period the previous year. A combined ratio below 100 per cent indicates profitability in the insurance industry.

Swiss Re’s life and health insurance business saw a fall of operating income to 88 million francs from 224 million. The asset management unit’s return on investments fell to 3.3 per cent from 4.9 per cent, partly due to writedowns of 248 million francs. The company said it aims for a return on equity of 12 per cent this year as it improves its investment portfolio and sells off undesirable assets.