Global reinsurer Swiss Re has reported strong second-quarter net profit of $US812 million ($887.5 million), reversing a loss of $US342 million ($373.8 million) in the same period last year.

The recovery comes despite “a challenging market environment” in which large claims saw the reinsurer’s property and casualty operating income drop to $US455 million ($497.4 million) from $US896 million ($979.6 million) in the prior corresponding period.

Claims from the earthquake in Chile alone are estimated at $US630 million ($688.8 million), while the Deepwater oil spill disaster is expected to cost the reinsurer a further $US200 million ($218.7 million).

Improved results in variable annuities saw the life and health business segment report operating income of $US142 million ($155.3 million) for the quarter, a big increase from a loss of $US8 million ($8.75 million) recorded in the same period last year.

Asset management was responsible for much of the gains, with operating income of $US1.2 billion ($1.3 billion), up from $US472 million ($516 million).

Swiss Re CEO Stefan Lippe says the company’s results show its success in preparing for the softening market and its adherence to stable pricing during the July renewals.

“For the past two years, we have positioned our reinsurance portfolio for the softening market,” he said. “The July renewals demonstrate that we are continuing to focus on disciplined cycle management – with profitability as the clear priority.”