Swiss Re eyes Asia after GE purchase boosts profit
ZURICH (Reuters) - Reinsurer Swiss Re (RUKN.VX) said it had escaped the subprime crisis and that second-quarter net profit jumped by 45 percent, meeting expectations, with the help of a large acquisition and low claims.
The world's largest reinsurer said on Tuesday it was eyeing Asia as the next driver for growth, after last year's $7.4 billion buy of General Electric's (GE.N) reinsurance business helped boost net profit to 1.19 billion Swiss francs ($1 billion).
"By 2010 (our Asia units) could be material contributors to the bottom line," Chief Financial Officer George Quinn told Reuters, saying Swiss Re would not shy away from making acquisitions in the region either.
The average forecast in a Reuters poll of 14 analysts was for a net profit of 1.25 billion francs.
Ahead of the U.S. hurricane season, which usually brings its largest costs, the Swiss group said it was confident its full-year results would be "strong".
June floods in the UK would cost Swiss Re around 50 million francs and the floods in July the same, it said, putting the estimated total at a modest 100 million francs.
The crisis in the U.S. subprime mortgage market had hardly affected Swiss Re's second-quarter results and the group said it had only built up limited exposure to that business recently, attracted by lower prices.
Swiss Re shares trailed the Dow Jones Stoxx insurance index .SXIP for most of the day, adding 1.2 percent by 1122 GMT at 102.20 francs, versus a 1.8 percent rise in the index, and some analysts expressed caution.
"The (hurricane) season has four more months to run. And, if the industry is lucky enough to escape with another clean year, prices will fall," said Tim Young at Collins Stewart.
The company is issuing quarterly figures for the first time this year.
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Swiss Re was keeping a close watch on credit markets in its financial services unit, which provides credit insurance as well as sophisticated risk protection instruments, but the credit crisis had had no major effect so far.
"In the second quarter, subprime has had almost no effect on Swiss Re," Quinn told journalists on a conference call.
Out of total invested assets of 190 billion francs, Swiss Re's exposure to subprime was 500 million francs, the group said.
The group's combined ratio, which measures claims and costs against premium income, improved to 90.7 percent, indicating healthy profitability, from 93.9 percent a year ago. Continued...
