Swiss Re Shares Seen Up Through End-1996

Analysts said investor interest in Swiss Reinsurance Co should be revived by the companys confirmed 54 percent jump in 1995 net profit, a forecast of significant 1996 growth and a 1995/96 dividend boost at rival Munich Re.

Weve put Swiss Re back in our basket of top performers as the only Swiss financial share in that basket, CS Research analyst Horst-Heiner Wiemer told Reuters.

Swiss Volksbank said it expected the share to gain speed short-term if it can break resistance at 1,370 Swiss francs.

Swiss Re registered shares were five francs higher at 1,361 in late morning trading after the group released final 1995 figures that confirmed preliminary numbers released in April.

 

Swiss Re, the worlds second biggest reinsurer after Munich Re of Germany, also confirmed it expected net profits to rise significantly this year from 1995s ordinary after-tax result of 1.092 billion Swiss francs.

Swiss Re moved very little for most of this year after a strong performance in 1995, and we think it will come back now, Wiemer said.

Wiemer said the groups 1995 performance, outlook for this year and 1997 added income prospects from recently acquired Mercantile & General Re would woo back investors who had shied away from a price two times book value.

Bank Baers Beat Alpiger said he had also put Swiss Re back on a list of stocks expected to outperform the Swiss market through the end of 1996 after a nine-month pause when it hovered between levels of around 1,170 and 1,330.

The insurance sector as a whole should be less quiet now than it was so far in 1996, and the biggest companies have better chances of outperforming than small and medium ones, Alpiger said.

Munich Re, the worlds biggest reinsurer, helped spark renewed interest in the sector by announcing last week a dividend hike for the 1995/96 from 13 marks to 16 marks after more than doubling earnings per share to 140 marks.

Alpiger said the biggest insurers, including Swiss Re, were seen by investors as having more opportunities to cut costs and enhance revenue.

Alpiger said he saw no reason to revise a forecast of 1996 ordinary net profit growth of around 22 percent and 25 percent in 1997, when earnings from life and health reinsurer Mercantile & General kick in.

Earnings per share should rise from 75 Swiss francs in 1995 to 90 this year and 113 in 1997, he said.

CS Researchs Wiemer also maintained his forecast of a 20 percent higher ordinary net profit this year and 1997, with earnings per share at 90 Swiss francs in 1996 and 108 next year.

This is at the conservative end of the market, he said.