Swiss Re Ltd. (SREN), the world’s second- biggest reinsurer, confirmed its financial targets and expects margins to improve at its two main reinsurance businesses.
New business is set to boost margins at its life and health unit, the Zurich-based company said today as it holds an investor day in London. Swiss Re also expects “a further firming of the reinsurance cycle” in property and casualty.
Chief Executive Officer Michel Lies said “ample capacity for new business opportunities in developed and emerging markets” will help the firm meet its targets. Swiss Re, which provided goals for individual units, is targeting an average annual increase in earnings per share of 10 percent until 2015 and a return on equity averaging 700 basis points above the risk-free yield of a five-year U.S. Treasury bond. A basis point is one-hundredth of a percent.
“The detailed explanation by Swiss Re for the individual business segments including newly the concrete figures and targets are to be welcomed,” said Georg Marti, an analyst with Zuercher Kantonalbank in Zurich. “It increases transparency.”
Swiss Re fell 0.6 percent to 54.30 Swiss francs as of 10:50 a.m. in Zurich. The stock traded without the right to the company’s 2011 dividend of 3 francs.
The reinsurer is targeting a return on equity of between 10 percent and 15 percent at its non-life reinsurance unit with the same range for its corporate solutions business, which sells direct insurance to companies. The life and health return-on- equity goal is 7 percent to 9 percent, Swiss Re said.
“We must improve overall returns,” said Chief Financial Officer George Quinn on a conference call. The company wants to achieve this with a “far more active management of capital allocation,” he said.
Swiss Re plans to double the size of its corporate solutions business by 2015, Quinn said. The unit had premium volume of nearly $2 billion at the end of last year and a market share of 1 percent.
Swiss Re will restate its figures under a new structure, which provides a breakdown for its reinsurance units, corporate solutions and Admin Re. The reinsurer will release first-quarter earnings on May 4.
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