Frankfurt Reinsurers are considered solid dividend payers. But the world’s number two in the industry, Swiss Re, apparently did not meet the expectations of shareholders this time. After the publication of the annual figures, the share temporarily lost more than eight percent on Friday on the Swiss stock exchange. At the end of trading, the stock was still 4.2 percent down, making it the only loser in the Swiss Market Index, the most important stock index in Switzerland.
Both the result and the outlook and dividend were disappointing, said UBS analyst Will Hardcastle. This is all the more true, added Philip Kett from the Jefferies analysis firm, since most of the competitors had performed better than expected.
Swiss Re managed to return to the black in 2021 despite the billions in costs from the natural disasters and the corona pandemic. But instead of just under $1.9 billion, as expected by analysts on average, the group only made a net profit of $1.4 billion. Experts fear that natural catastrophe losses could also weigh on earnings this year.
The reinsurer intends to keep the dividend stable at CHF 5.90 per share compared to the previous year. At the current price, this corresponds to a dividend yield of 6.7 percent. On average, however, the estimates were for a distribution of CHF 6.09 per share.
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According to data provider Bloomberg, not even half of the analysts recommend the stock as a buy. Almost a third of the experts advise holding and a good fifth even recommend selling the paper.
The picture is more positive for rival Munich Re, for whose shares 63 percent of the analysts recommend buying and almost 30 percent recommending hold. Only two analysts recommend selling.
The Dax group recently announced that it had slightly exceeded its own profit targets. Despite also high losses from natural catastrophes, the net profit of 2.9 billion euros was above the company’s own forecast of 2.8 billion euros – and thus also above the expectations of the analysts. CEO Joachim Wenning announced an increase to 3.3 billion euros for the current year.
Shareholders can look forward to a dividend increase of more than 12 percent to eleven euros per share. The dividend yield here is 4.4 percent.
The third-largest reinsurer, Hannover Re, has not yet made any concrete statements about the dividend for the past year. However, the group always wants to keep the basic dividend at least at the previous year’s level. In addition, CEO Jean-Jacques Henchoz announced that the payment of a special dividend was very likely.
Berenberg analyst Kathryn Fear from the French reinsurer Scor, which keeps the dividend constant at EUR 1.80 per share, was disappointed – although the results for 2021 were robust.
More: Reinsurer Swiss Re is making a profit again – and is setting new financial targets