With Andreas Berger taking over as Swiss Re CEO in July, analysts at JP Morgan have suggested his track record of delivery should be a catalyst for the firm to become a more reliable source of earnings and ultimately capital returns.
Berger has run the primary insurance operations of Swiss Re’s Corporate Solutions since 2019, reportedly spearheading a strong turnaround of this business.
“With a new CEO in place at Swiss Re from the beginning of July 2024 who has delivered across his tenure as CEO of the Corporate Solutions business, we believe that Swiss Re will now start to become a more reliable source of earnings and ultimately capital returns,” JP Morgans analysts said in a recent report.
They continued, “One of the criticisms that we have had of Swiss Re in recent years was that the company had not delivered results at a time when peers were producing far more reliable results.
“We expect that the CEO’s track record of delivery was taken into account for his succession, alongside delivering more reliable and less volatile earnings in Corporate Solutions than under his predecessors.”
Elsewhere in the report, the analysts also noted that at this stage, they believe that it is unlikely that management will choose to take any sort of material reserve charge at 1H24 results, with the reinsurance business far further along its reserve strengthening journey than Corporate Solutions was in 2019.
Meanwhile, JP Morgan observed that Swiss Re has not produced the same level of capital returns as peers in recent years, with 2019 the last year that the company announced a share buyback.
“With the company now, in our view, having a more stable earnings base, we expect Swiss Re to announce a CHF1bn share buyback programme at its 2024 results in early 2025,” The analysts added.
JP Morgan concluded, “In combination with our dividend forecast, this indicates a yield of ~9%. While we expect that the company will wait until its FY24 results, the company in theory could announce a share buyback earlier, even at its 3Q24 results in November following the conclusion of the Atlantic hurricane season.”
