At Swiss Re, Andreas Berger succeeds Christian Mumenthaler as CEO – despite strong annual figures for 2023. However, the reinsurer’s share price has developed significantly worse than its competitors in recent years.
The reinsurer Swiss Re is getting a new CEO. Andreas Berger will succeed Christian Mumenthaler from July this year. The 54-year-old Mumenthaler had held the office since July 2016.
Berger, 57, heads the reinsurer’s Corporate Solutions business unit, which bundles primary insurance business with major customers. Swiss Re’s board of directors agreed that Berger was the right leader to lead the reinsurer into the next phase of development, Jacques de Vaucleroy, vice president of the Swiss Re board of directors, was quoted as saying in a statement.
Born in Kigali, Rwanda, Deutsche Berger has been with Swiss Re since 2019 and previously held management positions at the consulting firm Boston Consulting Group and the insurers Gerling and Allianz.
Strong annual figures after disappointment
In 2023, Swiss Re, which is one of the largest reinsurers in the world, published strong annual figures for the first time in a long time. Mumenthaler kept his promise that Swiss Re would achieve a net profit of more than $3 billion. However, the reinsurer’s management had been overly optimistic several times in previous years and had fallen short of investors’ expectations.
“One could expect the resignation at some point, but the timing is surprising,” says Simon Fössmeier, insurance analyst at Bank Vontobel. In the period from 2017 to 2022, Swiss Re presented mixed to poor business figures. The company’s profit orientation is “not the most pronounced”. For many years, Swiss Re had struggled with external circumstances such as ultra-low interest rates, expensive natural disasters and the corona pandemic. The competition also had to endure these circumstances.
Shares from Munich Re and Hannover Re are better
Another observer said that Mumenthaler was lucky during this time that potential successors such as underwriting boss Thierry Léger left the company. Léger started as CEO of French competitor Scor in May 2023. It was said that you rarely get a chance for more than twenty quarters.
Things looked better for Swiss Re in 2023, and the reinsurer also implemented significant price increases. So far this year, Swiss Re stocks have achieved an increase of 18 percent. The previously subdued development of the share price for many years led to repeated criticism of Mumenthaler among investors.
In the past five years, Swiss Re shares – not including dividends – recorded a meager increase of almost 15 percent. At competitors Hannover Re and Munich Re, however, it was around 90 and 110 percent respectively. If you take dividends into account, the values over the past five years were 60 percent for Swiss Re, 127 percent for Hannover Re and 160 percent for Munich Re.
Swiss Re shares are lagging behind
Shares of reinsurers in cparson (in local currency), indexed, 5 years
According to Georg Marti and Michael Klien, analysts at Zürcher Kantonalbank (ZKB), after eight years it was probably time to appoint a successor to Mumenthaler. Berger has a good track record with the successful turnaround of the Corporate Solutions business unit and is likely to be received positively by the market. On Wednesday, the Swiss Re share reacted with a loss of 3.6 percent and closed at 111.25 francs, while the leading barometer Swiss Market Index (SMI) was slightly positive.
Short interlude from Sergio Ermotti at Swiss Re
“Swiss Re had another good financial year in 2023, but there is still a lot to do,” says Fössmeier. The company is currently benefiting from the positive market situation. He also sees Berger’s appointment as a measure to avoid falling back into old patterns in worse times.
This was one of the concerns after Sergio Ermotti returned to UBS after a brief interlude as chairman of the board of directors at Swiss Re to take over the position of CEO again. Ermotti was considered the initiator of the realignment of Swiss Re, which was founded in Zurich in 1863.
Mumenthaler’s resignation will probably occur regardless of the change in the chairman of the board of directors, says Fössmeier. The current UBS CEO initiated many things at the reinsurer, which de Vaucleroy is now continuing. The Belgian, born in 1961, has been proposed for election as the new Chairman of the Board of Directors of Swiss Re at the General Meeting on April 12th. De Vaucleroy is “as results-oriented as Ermotti,” says the Vontobel analyst.