Munich Re is continuing the trend of returning its excess capital to its shareholders, as the reinsurance firm announces another increase in the dividend it will pay to its shareholders and launched another €1 billion share buy-back programme.
In 2016 Munich Re paid its investors a dividend per share of €8.25. For 2017 that figure is rising by 35 cents to €8.60, as the reinsurer looks to return excess capital that cannot be deployed and also ensure its shareholders are compensated well for the risk they take with their investment in the company.
Outgoing CEO Nikolaus von Bomhard (who has now been replaced by Joachim Wenning) said at the Munich Re annual general meeting this week that; “Our dividend policy is sustainable and shareholder friendly. We have not reduced our dividend for almost 50 years.”
The new dividend payout will amount to €1.338 billion, while the previous year totaled €1.329 billion.
That’s quite a track record of sustainable and profitable growth, that a per share dividend can be consistent or increased over such a long period of time and reflects the very profitable sector that reinsurance has been over that timeframe.
Munich Re is also set to continue returning any surplus capital to its shareholders via a new share buy-back programme.
In the last financial year Munich Re bought back shares with a value of just slightly under one billion Euros, at €999.999.115. The company said that this represents 6,025,989 shares or around 3.74% of Munich Re’s total share capital.
A further share buy-back programme has been announced and Munich Re said that it will buy back shares with a value of up to €1 billion over the coming year, up to the next Annual General Meeting on 25th April 2018, as long as there are no major upheavals in the capital markets and the reinsurers business operations this year.
Adding up both the regular and increasing per share dividend payouts and the share buy-backs, Munich Re has now returned more than €23 billion to its shareholders since 2005.
Returning capital is one way to reduce the drag excess can cause if there is an inadequate number of opportunities to deploy it profitably in the open marketplace.
With reinsurance market conditions having become increasingly competitive, while growth opportunities lag the creation of excess capital Munich Re can be expected to continue returning it.