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Company description:
Swiss Re AG is a Swiss-based holding company. It provides wholesale reinsurance and insurance products, insurance-based capital market instruments, and supplementary risk management services to property and casualty, as well as life and health insurance brokers and other clients worldwide.  

It diversifies its activities into Property & Casualty, offering traditional reinsurance and insurance products to corporate clients; Life & Health, offering reinsurance to life insurance companies worldwide; Admin Re, which acquires and administers the closed life and health books of business, and Asset Management (included in the other business segments), which is engaged in the management of the assets that the group generates and setting the group's investment strategy. Swiss Re has a number of subsidiaries in Europe, the United States, Australia, Africa, Middle East, China and Vietnam.

Investment case:
Within the reinsurance market, Swiss Re combines defensiveness and growth; its business development is constant across all divisions. It has USD 31.85 billion in own equity and has a capital surplus of over USD 10 billion. These solid figures permit the company to maintain a AA rating from S&P.

This year the company is expected to distribute a special dividend, in addition to its standard dividend of CHF 3.30, somewhere in the region of CHF 4.15. About half of this dividend payment is based on recurring income and the rest on capital return. This total distribution will result in long-term investors earning a total dividend return of about 9% (at the present share price). Swiss Re offers the highest dividend yield in the SMI segment.  

Swiss Re has recently appointed a new CFO, David Cole, of which is little known in the wider investment community; therefore, the company may be subject to a new course in the coming quarters.

Strengths and weaknesses analysis / Fundamental analysis:
Strengths:

• Swiss Re is one of the largest reinsurance companies in the world,
• Its business is both defensive and growth based,
• The company has one of the best capital bases in the industry,
• The company’s valuation looks attractive with a PTBV of 1.1x and PE of 7.0x. 

• Swiss Re’s investment portfolio is subject to strong volatility, synchronous with financial market movement,
• Natural catastrophies are occurring more than ever. They are unpredictable and the resulting disbursements are large. A large part of Swiss Re’s business is exposed to this segment,
• Excessive realization of investment gains and reserve releases cannot be maintained forever,
• Given the ageing population in its key markets, the premium rates for non-life reinsurance are starting to erode, albeit from very profitable current levels.  

Company profile, investment opportunity and asset management integration:

Price ranges: