Swiss Re Expects Rising Prices

Swiss Re said on Tuesday it expected reinsurance prices to rise further and to boost its margins, with sound underwriting and the reorganization of its business units helping the firm achieve its financial targets.

The company, which competes with Munich Re and Hannover Re, has already seen a good start to 2012, with a rise in prices and is now expecting to build upon that strong beginning.

Last year proved one of the costliest ever to the insurance sector, due to unusually severe natural catastrophes, including the Japanese earthquake and tsunami and the floods in Thailand.

That means prices — which reinsurers charge their insurance company clients — are set to increase.

“A further firming of the reinsurance cycle is expected to drive margin improvements,” it said.

Ahead of an investor day in London, Swiss Re reiterated it aimed to outperform the market. It also said achieving its 2011-2015 targets — including annual earnings per share (EPS) growth of 10 percent over five years — was a top priority.

The investor day is the first for Michel Lies as chief executive officer. Lies, who has worked for Swiss Re for more than 30 years, took the helm in February, after former CEO Stefan Lippe surprisingly announced his retirement.

Lies, a citizen of Luxembourg, is expected to steer the same course as his predecessor.

Swiss Re has already paid back a convertible loan it took from U.S. billionaire Warren Buffett after risky bets soured during the financial crisis and also achieved its goal of reclaiming its former good credit rating.

Sound underwriting and prudent asset management would help contribute to the targets, the firm said, as would the ongoing reorganization of its business units.

“The new set-up enables the movement of capital in the group towards those areas with higher returns, George Quinn, chief financial officer, said, Reuters reported.