Stock Buybacks

[Viking]

It looks that we have a partial answer as to what insurers will be doing with all the excess capital that is out there... share buybacks.

 

Interesting to note that it is expected that re-insurer rates will be falling 2% to 5 % for January renewals. Swiss Re is targeting 12% ROE. When you look at low bond yields and falling pricing one has to wonder how long ROE's can stay at double digit levels. My guess is things may go sideways until reserve releases slow or natural catastrophes get back to more normal levels.

 

[ftp=ftp://http://www.bloomberg.com/news/2010-09-13/swiss-re-to-spend-up-to-3-5-billion-on-buybacks-dividends.html]http://www.bloomberg.com/news/2010-09-13/swiss-re-to-spend-up-to-3-5-billion-on-buybacks-dividends.html[/ftp]

[Partner24]

It looks that we have a partial answer as to what insurers will be doing with all the excess capital that is out there... share buybacks.

 

Makes sense to me, unless their reserves are understated and they'll need that capital to cover the additional costs over time.

 

Some keep dry powder because they think that some competitors will be in trouble and the opportunity to invest their capital at attractive rates will be interesting.

 

Time will tell. So far, we're still in the "soft market" chapter. Cheers!