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Swiss Re; Better Leverage, Solid Outlook. Credit Positive.

FINANCIALS

Swiss Re (SREN SW) released 4Q23 results which looked solid (aside from higher tax driving a net income miss) and shareholder leverage appears lower from positive moves in both numerator and denominator. So a credit positive; lower dividend and only small upgrade to FY24 profits may disappoint equity investors after the recent strong share price run.


  • Revenues rose 7.4% y/y (3% above consensus), pre-tax profit rose 20% (11% vs. cons) but net profit was marginally down (and 10% below consensus) on a higher tax charge (not a bad way to miss). GWP missed marginally, P&C combined ratio missed in 4Q23 but improved y/y and L&H net income was ahead. Dividend of USD6.80 is lower than USD7.31 in consensus. So a real mixed bag, operationally.
  • In credit terms, the RoIs continued to trend higher and a big improvement in unrealised losses (USD2.3bn swing) drove equity levels above expectations. Gross debt (ex-L&H working capital) is USD9.8bn (from 11bn at Sep-23), so some credit positives in here.
  • FY24 targets are quite an upgrade on FY23 and include net income above USD3.6bn, consensus is 3.65bn, so perhaps a small upgrade there. RoE looks set to beat 20% again. Guidance on January renewals season looks positive, too.

Conf call is 1300 London time, at: https://media.choruscall.eu/mediaframe/webcast.html?webcastid=mCPmjrRb

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