November 8, 2012 / 6:56 AM / 5 years ago

UPDATE 2-Swiss Re eyes special dividend after profit beat

* Q3 net profit $2.2 bln vs $1.4 bln in Reuters poll

* Pledges sustainable dividend, considers special payout

* Too early for Hurricane Sandy damage claims estimates (Adds management, analyst comment)

By Katharina Bart

ZURICH, Nov 8 (Reuters) - Swiss Re beat third-quarter earnings forecasts and said it might pay a special dividend if it cannot find ways to plough earnings back into the business.

“Our first priority is to deliver on our financial targets and provide our shareholders with a sustainable dividend that we plan to increase in line with long-term earnings,” Swiss Re financial chief George Quinn said on Thursday.

“If we are unable to find opportunities that meet our return expectations, we would look at further measures to return excess capital, such as a special dividend,” he said.

The Zurich-based reinsurer paid shareholders 3 Swiss francs ($3.17) a share on the back of 2011 earnings.

The Swiss reinsurer also said it was too early to make damage claim estimates from Hurricane Sandy, which killed at least 113 people in the United States last week, ravaging New York city and seaboard towns.

The storm is likely to nudge prices higher in the reinsurer’s key January renewals round due to steeper demand, Quinn told journalists, but gave no details.

Swiss Re posted a $2.2 billion net profit for the third-quarter, compared with the average estimate of $1.4 billion in a Reuters poll.

The result was bolstered by a $600 million one-off gain from the sale of its Admin Re life insurance business in the United States, as well as $881 million in dividends paid to Swiss Re before the disposal.

Bank Sarasin analyst Martin Schwab said the result would be welcomed by investors, even factoring in the unusual disposal gains.

“The prospect of a special dividend will be welcomed, given markets are volatile. In addition, the non-life reinsurance business seems to be ticking along very healthily as in past quarters,” Schwab said. He rates the stock at neutral.

Swiss Re’s stock rose 1.82 percent in early trading.

Swiss Re’s third-quarter premiums rose nearly 12 percent on the year to $6.6 billion, beating analyst estimates for $6.3 billion.

Huge natural catastrophes in 2011, including the Japanese earthquake and tsunami and flooding in Thailand, have allowed insurers, who for years have had to grapple with low bond yields, to charge higher prices on property and casualty policies.

Earlier this week, the world’s biggest reinsurer Munich Re raised its full-year net profit target on the back of surging investment income and moderate damage claims.

Smaller rival Hanover Re also struck a bullish outlook on profit for this year and next.

$1 = 0.9456 Swiss francs Reporting by Katharina Bart; Editing by Mark Potter and David Cowell

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