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(Bloomberg) -- Swiss Re AG, which announced plans for a share buyback, will also aim to pay a growing regular dividend, said Chief Financial Officer David Cole.
“We want to maintain a very strong financial position,” Cole said in an interview in Zurich. “As we continue to invest in the growth and profitability of the business, we would like to see the regular dividend grow as well.”
The world’s second-biggest reinsurer said Thursday it plans to shift to share buybacks to return excess cash to investors after three years of paying a special dividend. Swiss Re will seek to repurchase as much as 1 billion francs ($1.1 billion) of its stock by the shareholder meeting next year.
The stock rose as much as 1.6 percent in Swiss trading, and was 1 percent higher at 85.65 francs by 4:42 p.m. The shares have advanced 3.1 percent in the past year.
Reinsurers, which help insurers shoulder risks in exchange for a share of the premiums, are returning cash to investors as gains on fixed-income investments and lower-than-average disaster losses leave them with a surplus of funds.
“If we see a reasonable opportunity to invest over the short or medium term it makes sense to maintain that ability,” Cole said. “The excess capital that goes beyond those needs will be returned to our shareholders, for example, through share buybacks.” He declined to comment on the size of possible future buybacks.
Swiss Re plans to raise its regular dividend for 2014 to 4.25 Swiss francs a share from 3.85 francs for 2013. It will also distribute a special dividend of 3 francs a share, down from 4.15 francs a year ago. That represents a total payout of 7.25 francs a share for 2014, compared with 8 francs.
Munich Re is raising its dividend to 7.75 euros a share for 2014 from 7.25 euros. The world’s biggest reinsurer also plans to buy back 1 billion euros ($1.14 billion) of stock before its annual shareholder meeting in April.
Swiss Re shouldn’t be expected to “be actively participating in the consolidation of the reinsurance market,” Cole said. The situation is different on the corporate solutions side, where Cole said it’s “willing to make acquisitions to bring in new capabilities” and expand its geographical footprint.
To contact the reporters on this story: Oliver Suess in Munich at email@example.com; Jeffrey Vögeli in Zurich at firstname.lastname@example.org To contact the editors responsible for this story: Mark Bentley at email@example.com Frank Connelly, Cindy Roberts