Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Microcap & Penny Stocks : Rat dog micro-cap picks... -- Ignore unavailable to you. Want to Upgrade?

To: Bucky Katt who wrote (10751)	2/26/2003 8:51:00 AM
From: Bucky Katt	Read Replies (2) \| Respond to of 48461

Swiss Re to Reduce Dividend for First Time in a Century Swiss Reinsurance Co., the world's second-biggest reinsurer, will cut its dividend for the first time since the 1906 San Francisco earthquake after declining stocks eroded investments and led to a loss last year. Swiss Re, which helps cover liabilities for insurers, posted a loss of 100 million Swiss francs ($74 million) after a 3.4 billion-franc charge for writedowns, spokesman Henner Alms said. The company paid a 2001 dividend of 2.50 francs a share. ``Everything hinges on the rise and fall of stock markets and Swiss Re is especially vulnerable to this,'' said Reinhard Pfingsten, who helps manage about 15 billion euros ($16 billion) at Deka Investment in Frankfurt, including Swiss Re shares. European reinsurers are struggling to restore earnings and bolster reserves after three years of falling stocks ate into the capital they use to back new business. Chief Executive Officer John Coomber is cutting the amount of shares Swiss Re holds to shield it from further writedowns and protect the capital base. The shares fell as much as 6.7 francs or 8.7 percent, to 70.15 francs and traded down 6 percent at 72.25 francs as of 12:57 p.m. in Zurich. The stock has shed 49 percent in the past year. Stock Investments Like insurers such as Credit Suisse Group's Winterthur unit, Swiss re has been hurt by a strategy of buying more stocks than bonds during the equity market boom of the late 1990s. Stocks made up as much as 36 percent of Swiss Re's portfolio in 1998. Coomber, who replaced Walter Kielholz as CEO last month, has cut the level of stocks in the company's investments to less than 8 percent at the end of last year from 18 percent in June. Swiss Re's loss comes after billionaire investor Warren Buffett's General Reinsurance Corp. had an underwriting loss of $434 million in the third quarter. Results at General Re, the world's third-biggest reinsurer, have been hurt by bigger-than- expected claims and a decade of price-cutting. Zurich-based Swiss Re, which has paid a dividend every year since 1869, didn't say by how much it plans to reduce the payment. The dividend cut ``clearly shows that there isn't much left in reserves, given that the company in the past took pride in its steady dividend payments,'' said Christian Hamann, an analyst at Bayerische Landesbank who rates the stock ``market perform.'' `Disappointing' The company's return on investments was about 4.7 percent last year, two percentage points below its target. In 2001, the return was 8 percent. Realized investment gains fell to 3.1 billion francs from 3.4 billion francs in 2001, the company said. Swiss Re, founded in 1863, had a deficit of 280 million francs in the life and health unit after investment returns weren't enough to cover guaranteed death benefits, Swiss Re said. The company's top credit rating was cut one level by Fitch Ratings in December and by Moody's Investors Service in November after first-half earnings fell 91 percent, dragged down by 917 million francs of investment writedowns. Standard & Poor's cut Swiss Re's credit rating in October to AA+ from AAA. While the 2002 loss ``is disappointing, the underwriting improvements made during 2002 and built upon in this January's renewals underline the attractive outlook for our core businesses,'' Coomber said in a statement today. Premium rates at Swiss Re's property-and-casualty business rose 10 percent during renewals last month as the reinsurer continued to benefit from higher prices after the Sept. 11, 2001, terrorist attacks in the U.S. boosted demand for reinsurance. Swiss Re gives details of its 2002 results on March 27. Rising Rates The property-and-casualty rate increases are about the same as price gains expected by German rivals such as Munich Re and Hannover Re. Munich Re last month said it expects premiums to grow by about 10 percent in 2003, mainly because of higher prices. The financial services unit, which includes asset management, credit and surety reinsurance and aviation policies, had average rate increases of 16 percent on the 43 percent of corporate risk policies renewed between October and January, the company said. Credit and surety premiums rose 5 percent. Swiss Re is merging its capital partners private-equity and fund business with the asset management unit. ``There will be some job cuts, but not many'' in capital partners, which employs 120 people worldwide, Alms said without being more specific.