* Cole has been chief risk officer since 2011
* Reinsurer to raise dividend by 10 percent to 3.85 francs/shr
* Also plans 4.15 franc special dividend
* Share outperform reinsurance peers (Adds detail, CFO, analysts, share price)
By Alice Baghdjian
ZURICH, Feb 20 Reinsurer Swiss Re promoted David Cole to finance chief and raised its payout to shareholders after an unexpected rise in annual profit, taking the sting out of falling prices for new business.
Cole, who has been chief risk officer since 2011, will replace Chief Financial Officer George Quinn when he joins Zurich Insurance Group in May.
Swiss Re and rivals such as Hannover and Munich Re help insurance companies cover the cost of major damage claims, such as for hurricanes or earthquakes, in exchange for part of the premiums their customers pay.
But fewer serious natural catastrophes and an increase in competition from alternative sources of capital for the insurance industry have been reducing reinsurers' pricing power.
Zurich-based Swiss Re said prices on contract renewals in January had fallen, particularly for its natural catastrophes business. Prices of new business fell 3.6 percent, while overall business volumes shrank 6 percent.
"We did what I think most people would expect us to do when prices fall, we simply wrote less business," Quinn said.
Munich Re, the world's biggest reinsurer, said this month it had largely been able to buck the downward price trend when renewing contracts in January.
Swiss Re said on Thursday it would raise its 2013 dividend by 10 percent to 3.85 Swiss francs ($4.3) a share and would also pay a special dividend of 4.15 francs per share.
JP Morgan analysts said the special dividend should support Swiss Re's share price in the short term. But the weak renewals trend could put pressure on the shares, which could underperform those of primary insurers that are benefiting from the fall in reinsurance prices.
Swiss Re shares were 0.1 percent higher by 1059 GMT, outperforming a 0.9 percent decline in the European insurers index.
Swiss Re released $1 billion in reserves previously set aside for disaster payouts, which, along with a more favourable tax rate, helped 2013 net profit rise 6 percent to $4.4 billion.
This compared to forecasts for a 7 percent fall to $3.897 billion in a Reuters poll.
"The quality of earnings beat, at first glance doesn't look very high quality with tax benefit and reserve releases in property and casualty looking like the main drivers," analysts at Barclays Capital said in a note to clients.
Swiss Re reported a combined ratio, an insurance industry measure of profitability weighing payouts against premium income, of 86.6 percent in the fourth quarter compared with 90.5 percent a year earlier.
The company has said it expects natural catastrophe pricing rates to stabilise in 2014 after a decline last year, with demand for the cover doubling by 2020 in high-growth markets.
Cole, a Dutch and American citizen, joined Swiss Re in 2010 from ABN AMRO Holding, where he had served in several positions including chief financial officer and chief risk officer. ($1 = 0.8878 Swiss francs) (Editing by Erica Billingham)