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Swiss Re proposes higher FY'17 dividend despite 91% YOY fall in annual profit

Swiss Re AG booked a significant year-over-year decline in annual results, noting that the estimated insurance claims from a series of natural catastrophes in 2017 amounted to $4.7 billion.

The Zurich reinsurance company reported full-year 2017 net income attributable to common shareholders of $331 million, compared to $3.56 billion earned in 2016. EPS for the year was $1.03, compared to $9.82 a year ago, while return on equity was down to 1.0% from 10.6% in 2016.

The property and casualty reinsurance division booked a loss of $413 million, compared to a profit of $2.10 billion in 2016, while the life and health reinsurance business contributed a net income of $1.09 billion in 2017, up from $807 million a year ago. The corporate solutions business incurred a net loss of $741 million in 2017, compared to a profit of $135 million a year ago, while net income in the life capital business declined year over year to $161 million from $638 million.

Gross premiums written totaled $34.78 billion in 2017, down from $35.62 billion in 2016. Premiums earned and fee income totaled $33.71 billion in 2017, compared to $33.23 billion a year earlier.

Net investment income stood at $3.71 billion, up year over year from $3.66 billion in 2016, while net investment result declined to $3.32 billion from $5.38 billion.

Claims and claim adjustment expenses totaled $16.73 billion in 2017, up from $12.56 billion in 2016. Swiss Re also paid out life and health benefits of $11.08 billion, up from $10.86 billion in 2016.

The reinsurer noted that its $4.7 billion loss burden for the year, net of retrocession and before tax, was driven by losses associated with Cyclone Debbie, Hurricanes Harvey, Irma and Maria, the Mexican earthquakes in Mexico and wildfires in California.

The combined ratio in the P&C Re division stood at 111.5% in 2017, compared to 93.5% a year ago, while the corporate solutions business posted a combined ratio of 133.4%, compared to the year-ago 101.1%. A combined ratio above 100% implies an underwriting loss.

Swiss Re's board is proposing a dividend of CFH5.00 per share for 2017, up from CHF4.85 in 2016. The dividend will paid after shareholder approval at the company's April 20 annual general meeting. The board will also propose a further public share buyback program of up to CHF1.0 billion.

Additionally, three members of the reinsurer's board — Rajna Brandon, Mary Francis and C. Robert Henrikson — will be leaving in 2018. Karen Gavan, Eileen Rominger and Larry Zimpleman will be proposed as new, nonexecutive and independent members of the board at the company's annual general meeting.