Swiss Re announced record 2006 earnings of CHF 4.6 billion ($3.76 billion), a 98 percent increase over 2005. Earnings per share were CHF 13.49 ($11.02), a 16.3 percent return on equity. Shareholders’ equity rose by 27 percent to CHF 30.9 billion ($25.26 billion).
Swiss Re also announced plans to buy back shares for up to CHF 6 billion ($4.9 billion) over the next three years. The first step will be to repurchase around 50 percent of General Electric’s stake between March 1 and March 9 – a buy back that should be helped by the current decline in global stock markets. Over the next three years Swiss Re plans a share buy-back of the remainder of up to CHF 4 billion ($3.27 billion). The Board of Directors will also propose to the Annual General Meeting a 36 percent increase in the dividend to CHF 3.40 ($2.76) per share
CEO Jacques Aigrain commented; “2006 is a significant step in Swiss Re’s path to sustained growth in earnings and demonstrates our commitment to superior returns. With net income of CHF 4.6 billion, Swiss Re achieved a record result, based on disciplined underwriting in Property & Casualty, consistent returns from Life & Health and a rising contribution from our Financial Services business.
“The acquisition and smooth integration of Insurance Solutions and more recently the GE Life UK closing demonstrate our strengths in organizational excellence. Based upon Swiss Re’s strong financial position and our confidence in driving sustainable earnings growth, Swiss Re plans a share buy-back program and proposes to increase its dividend.”
Commenting on the integration of GE Insurance Solutions, Swiss Re said it “is well advanced and has been accomplished smoothly. Key Insurance Solutions personnel have been retained, contributing to Swiss Re’s enlarged talent pool. Since the closing of the acquisition in June 2006, Insurance Solutions has contributed CHF 3.5 billion ($2.86 billion) to Swiss Re’s total premiums earned.
“75 percent of the Insurance Solutions non-life portfolio and 98 percent of the Insurance Solutions Life & Health portfolio have been retained, being rapidly merged into Swiss Re’s book in terms of pricing, underwriting and marketing. Estimated synergies, both in terms of personnel and other cost reductions, are expected to exceed the original target and are now targeted to exceed CHF 460 million ($376 million) savings by the end of 2008.”
Swiss Re also indicated that it is maintaining its earnings targets for 2007. The world’s biggest reinsurer is aiming for earnings per share growth of 10 percent and return on equity of 13 percent over the cycle, “reflecting the Group’s commitment to grow returns for shareholders and to focus on economic profit growth, earnings stability and innovative client solutions to seize the opportunities of the reinsurance and financial services markets.”
The full report, additional information and a replay of the earnings conference call may be obtained on the Group’s web site at: www.swissre.com.
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