Swiss Re Earnings: Ahead of Consensus; Full-Year Guidance Maintained; Shares Undervalued

Swiss Re reported numbers for the first three months of the year that are ahead of consensus, with $1.1 billion in net income ahead of the $0.96 billion estimate collected by the company. Property and casualty insurance revenue rose to $4.96 billion and the April renewals went well. Compared with the April renewal last year, this year's renewal included a 6% volume and 12% pricing rise—$2.5 billion of treaty premium was renewed. However, versus loss assumptions, we think pricing was in line. The largest sales increases have been in property and specialty in Asia and Europe, Middle East, and Africa, and Swiss has continued to shrink the casualty business, which should lead to improvements in underwriting. Natural catastrophes in the first quarter were low. The life and health reinsurance business is benefiting from an improvement in United States mortality rates, and, again ahead of consensus estimates, is on track to achieve the $1.5 billion full-year net income target. First-quarter life and health net income came in higher than our estimates; property and casualty net income was lower than our estimates; and for corporate solutions, results were in line. The corporate solutions business continues to benefit from well-ordered levels of underwriting.