Swiss Re warns of £435m loss

SWISS RE, the world's second-largest re-insurance group, forecast net losses for 2001 of around Swfr200m (£82m) after a hit of Swfr2.95bn from 11 September. Although the group will absorb part of the loss with a Swfr1bn (£435m) dip into reserves, the slide into losses was compounded by claims for other exceptional events such as tropical storm Allison and the Enron collapse. Weakening stock markets also hit the value of the group's investments. The dividend is held at Swfr2.50.

But the terrorist attacks on the US have since had a beneficial effect, the company claimed. Because of heavy losses sustained by the insurance industry, new capital is reluctant to enter the market, and capacity is scarce, despite an increase in demand for re-insurance cover.

So Swiss Re's property & casualty and financial services renewals at 1 January show 'significant improvements in rates as well as terms and conditions across all lines of business'.

Renewals this year are expected to be at comparable levels, and the group plans to use its triple A rating to take advantage of a 'flight to quality' by insurers seeking re-insurance. 'Given its positive outlook for earnings going forward, the group expects a sharp increase in earnings for 2002,' Swiss Re said.