Swiss Re’s life and health reinsurance business has reported a 35.2% year-on-year (YoY) fall in net income for the first nine months of 2014.
The reinsurer generated net income of $272 million for the first nine months of 2014 – compared to $420 million for the same period in 2013.
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It said the decrease in net income resulted mainly from realised losses during the period. It noted that these were partially offset by lower interest expenses and higher operating income.
On a more positive note, Swiss Re said premiums earned and fee income for its life and health reinsurance business were 16% higher YoY for the first nine months of 2014 at $8.4 billion.
The operating margin was 8.8% for the first nine months of 2014 compared to 8.2% a year earlier.
Overall, Swiss Re’s business units delivered a net income of $3.3 billion for the first nine months of 2014, compared to $3.2 billion for the first nine months of 2013.
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By GlobalDataSwiss Re added that it has been focusing on a number of management actions to improve the profitability of its in-force L&H business.
Along with progress on other actions, the company said it has made substantial progress in negotiations with certain clients in respect of the pre-2004 US individual life business.
Swiss Re said it now expects to conclude these negotiations during Q4 2014 and to incur a pre-tax US GAAP charge of approximately $550 million, slightly higher than the previously communicated estimate of $500 million.
The reinsurer said these negotiations, once finalised, are expected to support higher earnings for L&H Re going forward and to contribute to achieving its return on equity target of 10-12% for this segment by 2015.
Swiss Re’s group CFO, David Cole, said: "I’m pleased to report that all business units have again delivered a solid performance during the third quarter, contributing to an overall strong group result.
"This performance was supported by a lower than expected loss burden from natural catastrophes as well as a continued improvement in the L&H operating margin."
