Global reinsurance giant Swiss Re’s Board of Directors has proposed plans to introduce a new public share buy-back program consisting of two tranches of each up to CHF1 billion (US$995,000), effectively doubling the amount it returned to shareholders last month.
The proposal, due to be put forward at Swiss Re’s upcoming Annual General Meeting of shareholders (AGM) on 17 April 2019, is dependant on the successful reduction of the company’s holding in ReAssure to below 50%.
Swiss Re had previously stated intentions to reduce its stake in ReAssure in order to reduce its exposure to UK credit risk, which consumes a disproportionate level of capital under Swiss Solvency Test (SST) regulations.
The most obvious benefit of the IPO, according to a statement released by JP Morgan recently, is that a deal would “crystalise some of the value in the Swiss Re sum-of-the-parts,” which analysts believe is implicitly discounted by the market.
By reducing its stake in ReAssure, Swiss Re will also benefit from removing a unit that contributes a disproportionate level of financial market risk, JP Morgan noted.
The Board of Directors also proposed a 12% higher regular dividend of CHF5.60 per share, citing the company’s strong capital position relative to previously-set targets.
The dividend will be paid after shareholder approval at Swiss Re’s upcoming AGM.
“We are living in uncertain times and events on the world stage are increasingly providing cause for concern. However, I believe we are very well prepared for these challenges and we are looking to the future with confidence,” said Swiss Re’s Chairman of the Board of Directors, Walter B. Kielholz.
“Our strong long-term economic earnings create the basis for our capital generation and dividend capacity.”
“Since 2013, we have already paid back USD 14.5 billion to our shareholders via share buy-backs and dividends; which will increase to USD 17.2 billion if the proposed dividend and first tranche of the new share buy-back are accepted and executed.“