(Bloomberg) — Swiss Re AG named Christian Mumenthaler, a 17-year veteran of the company who heads the main reinsurance unit, as chief executive officer from July 1. He will succeed the retiring Michel Lies.
Mumenthaler, 46, has held several posts on the company’s executive committee, including that of chief risk officer. The reinsurance unit he led generates about 85 percent of the company’s revenue, Swiss Re said in a statement Tuesday. No decision has been made yet on a successor for Mumenthaler.
“Although we did not expect this announcement today, we are not surprised by the succession, William Hawkins and Rufus Hone, analysts at Keefe, Bruyette and Woods, said in a note to clients. “Mumenthaler is well-known to the investment community already and has had a number of important roles at Swiss Re. We view this orderly succession favorably.”
Swiss Re fell as much as 2.8 percent in Zurich trading and was down 1.5 percent at 92.05 francs ($92.76) as of 9:45 a.m. The stock is up 7 percent over the last 12 months.
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Reinsurers including Munich Re, Swiss Re and Hannover Re sell backup coverage to insurancecompanies, protecting them against big risks such as natural disasters. While losses from catastrophes last year fell to the lowest since 2009, earnings in the industry continue to be squeezed by record-low interest rates and declining prices for coverage.
Fourth-quarter net income rose to $938 million from $245 million a year earlier, when earnings were hit by one-time charges. That exceeded the $915.6 million average estimate of eight analysts surveyed by Bloomberg.
Despite the positive earnings, Swiss Re’s stock will face continuing pressure due to overcapacity in the industry and a negative outlook for prices, Baader Helvea analyst Daniel Bischof wrote in a note to investors. Swiss Re Chief Financial Officer David Cole also said he expects continued price pressure, though it will probably diminish.
Swiss Re increased its dividend to 4.6 francs, compared with a Bloomberg estimate of 4.5 francs. Last year, the company paid out a regular dividend of 4.25 francs and a special dividend of 3 francs. The reinsurer on Tuesday also announced plans for a share buyback of up to 1 billion francs to deploy its excess capital.
Net income at the property & casualty reinsurance unit fell to $703 million from $1.2 billion a year earlier. Profit in the fourth quarter was hit by flood loses losses in the U.K. and India, Swiss Re said. The unit’s combined ratio rose to 89.6 percent from 86.7 percent in the fourth quarter. A ratio greater than 100 means that an insurer is paying more in claims and costs than it is collecting in premiums.