Swiss Re, the global insurance giant whose U.S. headquarters are in Armonk, reported a second quarter profit of $83 million after taking a billion-dollar loss on the sale of its former Admin Re U.S. business to Jackson National Life.
Swiss Re lost 12 cents a share in the quarter. Excluding the Admin Re sale, earnings would have been $3.22 a share.
Earnings from property and casualty reinsurance almost doubled to $717 million. Losses from natural catastrophes in the quarter were low. Premiums earned in that sector were up 18 percent from a year ago.
In life and health reinsurance, earnings were almost half what they were a year ago. The cost of claims, Swiss Re said, was significantly higher. The result also reflects lower investment income, a continuation of the negative performance of business written in the Americas prior to 2004, and slightly higher expenses due to strategic initiatives, especially in the health area. Consequently, the operating result was lower than expected.
The Corporate Solutions unit earned half what it did a year ago but premiums earned rose by 22 percent. Higher-than-expected claims from natural catastrophes and man-made disasters in the quarter were partly offset by investment income.
Admin Re reported a loss of $916 million in the quarter due to the $1 billion hit from the sale of the U.S. business, which was more than Swiss Re expected when it announced the deal in May because of a subsequent drop in interest rates in June.
The Admin Re sale is expected to be completed in the second half of 2012. It will result in a $900 million payment to Swiss Re. Swiss Re saw a successful renewal period in July, which was focused on the Americas, Australia and New Zealand.
“The results were broadly enough in line,” said Ben Cohen, analyst at Canaccord Genuity in London. “They”™re probably not going to move the dial much for anyone at this stage.”
Cohen did say overall earnings were slightly better than expected, helped by material gains on the company”™s investment portfolio. He added that property and casualty results were better than expected because there have not been many natural disasters so far this year, especially when compared with last year.
As for the sale of Admin Re, Cohen said it “is unlocking capital, that seems to be working for them, they can invest it in high-return businesses.”
