Reinsurers including Munich Re, Swiss Re and Hannover Re sell backup coverage to insurance companies, protecting them against big risks such as natural disasters. While losses from catastrophes last year fell to the lowest since 2009, earnings in the industry are being squeezed by record-low interest rates and declining prices for coverage.

Shares Drop

Swiss Re fell as much as 1.8% in Zurich to 86.80 Swiss francs, the lowest in three weeks. The shares have declined about 11% this year.

Chief Financial Officer David Cole said on a call with reporters that Swiss Re received some late claims related to earthquakes in New Zealand in 2010 and 2011. The reinsurer is continuing to review its overall reserving position on asbestos and all other major portfolios, he said.

“We’ve come to the conclusion that there is an indication there may be some further deterioration,” Cole said. “We are well-positioned in terms of our overall reserving levels for asbestos-related claims relative to the industry."

While premium income increased at the main units, property & casualty reinsurance and life & health reinsurance, net income declined.

The combined ratio, an industry measure, rose to 92.8% from 85% a year earlier. A ratio greater than 100 means that an insurer is paying more in claims and costs than it is collecting in premiums.

‘Question marks’

“The key driver of profitability is the P&C reinsurance business and these results raise some question marks about the medium-term profitability of that business,” said Sami Taipalus, a London-based analyst at Berenberg.

Reinsurance prices have been falling to their lowest in four years due to competition from alternative-capital providers that started offering products and absence of natural catastrophes.

Related: Swiss Re books $250 million in losses from Tianjin disaster

“The price erosion for property natural catastrophe business has slowed, while casualty markets remained relatively stable,” the company said in a statement.

Hedge funds, sovereign wealth funds and other providers of alternative capital set aside $72 billion for reinsurance last year, a 12% increase from 2014, even as allocations from traditional capital fell 4% to $493 billion, according to research by Aon Plc. That led to price cuts when policies were renewed on April 1, according to reinsurance broker Willis Re Inc.

Swiss Re appointed Moses Ojeisekhoba to become the head of the reinsurance unit. He will succeed Christian Mumenthaler, who will become chief executive officer on July 1, replacing the retiring Michel Lies.

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