Swiss Re, the world's second-largest reinsurer, plans to launch its share buyback programme in November after posting an unexpected rise in third-quarter net profit on October 29.
Reinsurers such as Swiss Re, Munich Re and Hannover Re act as a financial backstop for insurance companies, helping them pay for large damage claims from hurricanes or earthquakes in exchange for part of the premiums.
Earnings for the quarter to September were boosted by the release of cash that had been set aside for insurance policies as well as low payouts for natural disasters.
This helped net income rise to $1.4 billion from $1.2 billion a year earlier, exceeding an average estimate of $964 million in a Reuters poll of eight analysts.
Swiss Re's property-casualty combined ratio for the third quarter, a measure of underwriting profitability, was 78 percent, against a Reuters poll average of 88.3 percent. A figure below 100 percent indicates a profit.
The major hit in the quarter was an estimated pre-tax loss of roughly $250 million from a chemical explosion at China's Tianjin port.
"In the near term, investors can enjoy yet another strong quarter of earnings and continued cash returns," Barclays analysts wrote in a note. Analysts welcomed the strong headline figures but Vontobel's Stefan Schuermann, who has a "hold" rating on Swiss Re stock, cautioned that the underlying results were less impressive.
"If you exclude the luck, so to speak, then the results aren't really that strong," said Schuermann, referring to the positive impact from the lack of natural catastrophes as well as the release of reserves.
Analysts also flagged a year-on-year drop in quarterly income from fees and premiums.
Swiss Re said it remained on track to meet its 2011-2015 financial targets and that it now expected to launch its share buyback, first announced in February, in mid-November. The programme is worth up 1 billion Swiss francs ($1.01 billion). Finance chief David Cole told Reuters Swiss Re would continue to return any surplus cash to investors, likely though further share buybacks.
Cole also said Swiss Re was not on the lookout for major purchases in the reinsurance market.
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