Swiss Life is confident its solvency is crisis-resistant, but is suspending a major share buyback after it pays out more than half of its 2019 profits as a dividend.
Swiss Life's stock was severely battered at the outbreak of the coronavirus pandemic: the insurer is highly exposed to turmoil in financial markets, where it invests its income.
The Zurich-based company said its solvency is strong – 175 percent on a Swiss regulatory test, from 185 percent last year – and remains in the upper third of its own target range, in a statement on Wednesday. Swiss Life said it will suspend a planned share buyback program, after Switzerland's regulator urged financial service firms to batten down the hatches.
Share Slide
Swiss Life's shares slumped from their highest in 18 years – more than 520 francs at the end of last month – to half that value when the global pandemic broke out. CEO Patrick Frost sought to calm frayed nerves.
«Concerning the insured risks, Swiss Life has a balanced portfolio of mortality and longevity risks. The resulting risks for Swiss Life are therefore manageable,» Swiss Life said. «The main effects for Swiss Life arise from the impacts as a result of the turmoils in financial markets.»
Prudence Urged
The insurer will stick with its planned 20 franc per share dividend for 2019, which translates to a payout ratio of 53 percent of profits. It will mothball a 400 million Swiss franc ($408 million) share buyback plan that it floated last month.
Last week, Swiss regulator Finma urged banks and insurers to be prudent in managing their capital, specifically calling on them to halt share repurchase programs. As with all Swiss companies holding their shareholder meetings in April or May, Swiss Life said it will conduct the meeting without shareholders present.
