SWISS RE Dividend is sweeter than chocolate

Swiss Re is the largest Swiss Reinsurer and it’s dividend is sweeter than choccolate.

• Its capitalization 30BCHF is 20% cheaper than its book value (37B CHF).
• Extremely solid Solvency II ratio 262%.
• Its investment reached 114B$.

Once more, any interest increase can generate a substantial profit and dividend increase.

 

Operations

Swiss Re is the world 2nd biggest Reinsurer after Munich RE.

A well-diversified business (among Americas, Europe and Asia) is now focusing on capturing Natural Cat & Weather protection (180B $ opportunity).

This diversification allows to reduce risks of a specific region recession or currency (lower Swiss Franc would mean higher profit and dividend).

Existing business is keeping its combined ratio close to 97%.

 

Financial positions

Large  reserves (51.7B$) and limited Debt (2.8B€ subordinated and 0.8B€ of Senior debt) make Swiss Re very solid and ready to capture additional opportunities.

Just one year of Operating Cash Flow could repay the whole outstanding debt.

Top Management mentioned that they have room for dividend increase, strategic acquisition or share buyback.

 

Capital allocation

Since 2012, Swiss Re distributed almost 50% of current capitalization with 14.2B$ dividend (in only 6 years!).

They are also projecting higher dividend and share buyback.

Today Dividend yield is above 5%, while extra cash is available for Growth opportunities and share buyback (1B$ in 2016 and 2017).

Conclusion

In the meantime, interest rates are getting back to normal (3-4%), Swiss Re is repaying shareholders generously via dividend and share buyback.

In USA, it’s available under the ticker: SSREY