Swiss Re Raises Payout to Investors as Net Beats Estimates

Feb 20, 2014 3:22 am ET

(Updates to add analyst comment in fourth paragraph.)

Feb. 20 (Bloomberg) -- Swiss Re Ltd., the world’s second- biggest reinsurer, raised its proposed payout to shareholders for 2013 after posting fourth-quarter profit that exceeded analysts’ estimates.

Swiss Re plans a special dividend of 4.15 Swiss francs ($4.68) a share, up from 4 francs a year earlier, as well as a regular full-year dividend of 3.85 francs, up from 3.50 francs, the Zurich-based company said in an e-mailed statement today.

Fourth-quarter net income rose 52 percent to $1.21 billion from a year earlier, helped by a tax-related gain, beating the $796.5 million average estimate of 12 analysts surveyed by Bloomberg. Capital was more than $10 billion above the level required for a AA credit rating, Swiss Re said. Reinsurers, which help primary insurers shoulder risks, are increasing payouts to investors as strong balance sheets and lower-than- average losses from natural disasters result in an excess of capital for coverage.

“The total dividend and the higher net profit are positive, although mainly driven by tax,” said Daniel Bischof, a Zurich-based analyst with Helvea, who has a hold rating on Swiss Re. “On the negative side, there are the price and volume drops during January renewals and quarterly operating profit being dragged down by the life and health unit.”

Swiss Re rose 0.7 percent to 83.60 francs at 9:20 a.m. in Zurich trading. The stock rose 13 percent in the past year.

Finance Chief

Swiss Re said its life and health reinsurance unit swung to a $19 million loss in the fourth quarter from a $95 million profit a year before, after it had to strengthen reserves by $369 million for its disability business in Australia.

Rates for property-catastrophe policies up for renewal on Jan. 1 declined 3.6 percent, while Swiss Re’s business volume was reduced by 6 percent. The company, which renews 60 percent of its non-life reinsurance contracts in January, said it expects less “margin erosion” in its natural catastrophe business during April and July, the next major renewal dates.

“While we are well aware of the challenges ahead, we look forward to 2014 with confidence,” Chief Executive Officer Michel Lies said in the statement. The company said it is on track to meet its financial targets through 2015.

David Cole, currently chief risk officer, will take over on May 1 as chief financial officer from George Quinn, who will take up the same position at Zurich Insurance Group AG. Susan Wagner, BlackRock Inc.’s co-founder, was proposed as a new member to the board.

--Editors: Frank Connelly, Mark Bentley