Munich Re and Swiss Re consider plans to return extra capital The world's two largest reinsurers both raised the prospect of returning extra capital to shareholders, as they announced better than expected third-quarter results on Thursday. Munich Re said that it would buy back €1bn of shares before its annual meeting, due to be held at the end of April next year. Meanwhile, Swiss Re said that it was considering another special dividend, having paid out $2.8bn last year. Munich Re said that its buyback was "conditional on no major upheavals occurring on the capital markets or in underwriting business." On the basis of Wednesday's closing price of €154.5, the buyback would encompass around 6.5m shares, or around 3.6 per cent of Munich Re's share capital. "Share buybacks benefit all shareholders, at least indirectly," said Jörg Schneider, Munich Re's chief financial officer. Despite the buyback, our good capital position will allow us to continue utilising opportunities for profitable growth in individual regions and lines of business. At the same time, it supports the discipline which is so important to us when underwriting risks. Swiss Re's chief financial officer, George Quinn, said that the decision on whether to pay a special dividend would not be made until the group's annual results had been finalised, but said that such a move remained a possibility. Thomas Dorner, an analyst at Citi, said that returning capital was a sign of discipline for both companies. "They are big mature companies in big mature markets, and they are finding opportunities for growth, but not enough for all the capital they have built up," he said. They judge that it is better to return excess capital to shareholders, rather than keep it and dilute returns, and that is the right thing to do. In the three months to September, both groups posted better than expected profits, although neither earned as much as a year earlier. Munich Re's net profits came in at €636m - or €3.55 per share - down from €1.14bn a year earlier. Swiss Re made $1.1bn - or $3.12 per share - down from $2.2bn in the third quarter of 2012 when it booked a one-off $626m gain on the sale of part of its Admin Re business. Both sets of profits were comfortably ahead of the levels expected by analysts, however Mr Dorner said that this was largely due to one-off factors. Swiss Re had high reserve releases, and Munich Re had investment gains. I don't think this will be the start of massive earnings upgrades," he said.