Swiss Re returned to profit in 2009, reporting net income of CHF 506 million, compared to a loss of CHF 864 million in the prior year. Net income was impacted by impairments of CHF 2 billion, mainly in the securitised products portfolio, and by mark-to-market losses of CHF 1.9 billion on corporate bond hedges. The unrealised gains on these hedged corporate bonds of CHF 2.6 billion are reflected in shareholders’ equity. Earnings per share were CHF 1.49, compared to CHF –2.61 in 2008. Shareholders’ equity increased to CHF 26.2 billion at the end of 2009, compared to CHF 20.5 billion at the end of 2008. For the full year, return on equity increased to 2.3%, compared to –3.4% in 2008. Book value per common share was CHF 67.7, an increase of 11.1% compared to CHF 61.0 at the end of 2008. Given the restored capital strength of the Group and the continued healthy operating performance of its core business, the Board of Directors proposes to increase the dividend to CHF 1.00. This is the first step in returning to a normal dividend policy.

Swiss Re 4Q earnings are unexciting and shares may weaken today given recent gains, says Nomura. Net profit was slightly disappointing, driven by a weaker life operating result due to a "tightening of own credit spreads," saysNomura . The CHF1 dividend "looks much better, is a big beat versus expectations and the first step towards a normal dividend policy,". Rating held at buy and price target at CHF63.

UBS upgrades Swiss Re to buy from neutral, and lifts its price target to CHF57 from CHF49 following the company's 2009 results. Notes 4Q missed expectations, but likes the company's capital re-building. "The CHF9B of excess capital should help to regain the AA-rating and repay the Berkshire Hathaway bond," says UBS. 

Morgan Stanley lowers its price target on Swiss Re to CHF59.80, from CHF60.50, to reflect a decline in premiums and the current low yield it achieves on its portfolio. The reinsurer may boost the yield by reinvesting cash in longer duration assets and reduce its hedging of corporate bonds. "Such actions would lift earnings, but the size and timing of such a move remains highly uncertain," it says. Rating held at overweight.