* Cole has been chief risk officer since 2011
* Reinsurer to raise dividend by 10 percent to 3.85
* 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
Swiss Re shares were 0.1 percent higher by 1059 GMT,
outperforming a 0.9 percent decline in the European insurers
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)