Despite huge losses from natural disasters like earthquake in Chile etc., Swiss Re, a Swiss Reinsurance Co., the world’s second-biggest re-insurer, reported rise in net profit for the quarter ended March 31.
Headquartered in Zurich, the company posted 22 percent increase in net profit to $158 million from $130 million in the first three months.
Huge insurance claims recorded in the quarter
Over the quarter, the company had to face a lot of claims on catastrophes, like the 8.8 magnitude earthquake that struck Chile, floods in Australia, and a wind storm, Xynthia, in Western Europe, among others.
The claims amounted to $720 million in the first quarter for the company. Out of this, the claims for the Chile earthquake totaled to around $7 billion. The loss from winter storm in Europe in late February reached $3.2 billion.
Increase in excess capital
But despite facing a lot of claims for natural disasters, Swiss Re, has been able to post a strong quarter.
The reinsurance company, which insures insurance companies, has been able to boost its capital by nearly $3 billion.
It has gained the most in Zurich trading, and has been able to increase it excess capital to $12 billion at the end of first quarter from $9 billion in the last quarter of 2009.
“We'll be able to redeem the Berkshire Hathaway investment and still retain a very significant buffer above the minimum level required for AA.” -- George Quinn, chief financial officer, Swiss Re
The high investment income countered the worst insurance claims for the company. As a result, Swiss Re has been able to post a jump in net profit for the first quarter.
Swiss Re to repay Warren Buffet
Based on its strong performance in the first quarter this year, the reinsurer is confident to pay back costly convertible loan it took from Warren Buffet’s Berkshire Hathaway investment company last year.
The company stated that paying back $3 billion, which it borrowed, is a priority for it to regain “AA” credit rating from Standard & Poor.
George Quinn, chief financial officer, was quoted ABC news, as saying, “We'll be able to redeem the Berkshire Hathaway investment and still retain a very significant buffer above the minimum level required for AA."