Europe’s insurers need to think carefully before making acquisitions, Swiss Re Chief Financial Officer David Cole said.

Stricter capital rules under Solvency II, which come into force next year, will likely provide more opportunities for buyouts, Cole said in an interview in Zurich on Thursday.

“Given the broader dynamics in the marketplace, it’s not surprising to see consolidation taking place,” he said. “The key thing is that various players maintain discipline and that people avoid overreaching. You can overreach in a number of different ways.”

Cole said Swiss Re, Europe’s second-biggest reinsurer, may buy insurance assets, including companies, though such acquisitions must fit its business strategy. He spoke after the company reported second-quarter earnings.

Swiss Re, Europe’s second-biggest reinsurer, fell the most since April in Zurich trading after earnings missed analysts’ estimates on lower profitability at its property and casualty unit.

The shares declined 2.9 percent at 10 a.m. on July 30, crimping gains this year to 2.7 percent. The Bloomberg Europe 500 Insurance Index has climbed 13 percent in the period.

The company reported second-quarter net income of $820 million on Thursday, below the $834 million average estimate of eleven analysts compiled by Bloomberg. Profit was $802 million a year earlier, it said in a statement.

“The disappointment is on the property and casualty side,” said Daniel Bischof, an analyst at Baader Helvea in Zurich. “This is ultimately a reflection of the price environment that has been difficult in recent years.”

Swiss Re is among reinsurers that are seeking to maintain returns for shareholders amid record-low interest rates and falling prices in catastrophe reinsurance, spurred by more competition from hedge funds. The company is expanding in emerging markets and investing more capital in infrastructure to help boost returns.

Earnings at the property and casualty unit, which provides policies against events such as natural disasters, fell 18 percent to $453 million, with the adjusted combined ratio, or costs versus premiums, rising to 103 percent from 97.4 percent. Net income from life and health more than quadrupled to $218 million.

“Life and health reinsurance has continued to demonstrate performance improvement off the back of earlier management actions,” Chief Financial Officer David Cole said in prepared remarks for an investor presentation.

Net income from investments declined to $898 million from $1.1 billion a year ago. Return on investments in the first half of the year increased to 4 percent from 3.9 percent a year ago. The reinsurer booked net realized gains of $328 million in the second quarter compared with $159 million in the year-earlier period.

* This story is based on the combination of two separate Bloomberg stories by the same author.