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Tough markets, Debbie dent Swiss Re profit

Swiss Re’s earnings dropped by about one-third in the first half amid tough market conditions and losses from Cyclone Debbie.

Net income deteriorated to $US1.21 billion ($1.53 billion) for the six months to June 30 from $US1.87 billion ($2.36 billion) in the corresponding period last year.

Debbie, which hit Queensland in late March, led to $US360 million ($454 million) in insurance claims, net of retrocession and before tax.

“We reported a solid result, despite the challenging market environment and having paid significant claims in the aftermath of natural catastrophes,” CEO Christian Mumenthaler said. “We will continue to be selective in choosing the risks we underwrite, aiming to ensure future profitability.”

Gross written premium decreased 8.3% to $US18.1 billion ($22.8 billion) due to disciplined underwriting and active portfolio management, according to the company.

Net income from property and casualty reinsurance, the group’s largest division, declined to $US546 million ($688 million) from $US870 million ($1.1 billion).

CFO David Cole says the segment continued to experience pricing pressure in line with the overall industry, while the life and health divisions delivered stable or improved results.

“This shows the importance of having a diversified business model, which can help to balance out volatility in individual areas,” he said.

Return on investment was 3.5% compared with 3.7% a year earlier.

Swiss Re says it is integrating environmental, social and governance criteria into its investment decisions, and avoids investments in companies that generate 30% or more of their revenues from thermal coal mining or use at least 30% thermal coal for power generation.

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