Swiss Reports Yearly Net Up 98%, Buyback Planned

Urich, Switzerland-based insurer Swiss Re has reported that 2006 net income increased 98 percent to 4.6 billion Swiss francs ($3.8 billion), and the company plans a stock repurchase of 6 billion Swiss francs or $4.9 billion.

The profit amounted to 13.49 Swiss francs ($11.10) per share.

In its announcement last week, Swiss Re also said it agreed, subject to market conditions, to re-purchase approximately 50 percent of General Electric's stake in the company.

Swiss Re said its share buy-back will extend over the next three years for the remainder of those interests up to 4 billion Swiss francs ($3.3 billion).

The company said at its annual meeting that the board will propose a 36 percent increase in the dividend to 3.40 Swiss francs per share ($2.79).

Jacques Aigrain, Swiss Re's Chief Executive Officer, in a statement called 2006 a "significant step in Swiss Re's path to sustained growth in earnings that demonstrates our commitment to superior returns."

He said the company achieved a record result "based on disciplined underwriting in property and casualty, consistent returns from life and health and a rising contribution from our financial services business.

"The acquisition and smooth integration of Insurance Solutions, and more recently the GE Life UK closing, demonstrate our strengths in organizational excellence," he concluded.

Swiss Re reported a 98 percent increase in net income to 4.6 billion Swiss francs ($3.8 billion) in 2006. Earnings per share rose 81 percent to 13.49 Swiss francs ($11.10). Premiums earned increased 10 percent to 29.5 billion Swiss francs ($24.3 billion), benefiting significantly from the Insurance Solutions acquisition, the company said.

The investment result was 6.9 billion Swiss francs ($5.7 billion). A strong return on investments of 5.3 percent continued Swiss Re's record of above-average investment returns.

Property-casualty operating income increased 4.2 billion Swiss francs ($3.5 billion) to 5 billion Swiss francs ($4.1 billion) in 2006.

Premiums earned grew 7 percent to 17.4 billion Swiss francs ($14.3 billion), and the combined ratio improved to 90.4, reflecting strong underwriting performance and lower natural catastrophes, the company said.

Life and health operating revenues increased by 9 percent to 15.2 billion Swiss francs ($12.5 billion). The operating result rose to 1.5 billion Swiss francs ($1.2 billion), an increase of 14 percent, benefiting from strong performance in particular in health and Admin Re(SM). The return on operating revenues was slightly ahead of the prior year at 10 percent.

Financial Services total revenues rose 26 percent to 2 billion Swiss francs ($1.6 billion), and the return on total revenue was 26.9 percent. Operating income rose 21 percent to 460 million Swiss francs ($379 million).

Since the closing of the acquisition in June 2006, Insurance Solutions has contributed 3.5 billion Swiss francs ($2.9 billion) to Swiss Re's total premiums earned. Seventy five percent of the Insurance Solutions non-life portfolio and 98 percent of the Insurance Solutions Life & Health portfolio have been retained.

Estimated synergies, both in terms of personnel and other cost reductions, are expected to exceed the original target and are now expected to exceed 460 million Swiss francs ($379 million) savings by the end of 2008.

Swiss Re maintained its targets of earnings per share growth of 10 percent and return on equity of 13 percent over the cycle, the company reported.