NEW YORK, Feb 15 (Reuters) - Europe's two largest reinsurers could benefit from rising pricing, but No. 1 Munich Re (MUVGn.DE) could be a better short-term bet for investors than its closest rival, Swiss Re (RUKN.VX), according to Barron's.
In its Feb. 16 edition, the weekly financial newspaper said Swiss Re, which has been badly hit by derivatives losses in the last year, was in an improved position after Warren Buffett's Berkshire Hathaway (BRKa.N) (BRKb.N) raised its investment in the company with a $2.6 billion cash injection earlier this month.
But Barron's said Swiss Re still faces some hurdles, including having to raise additional funds. Munich, on the other hand, is still offering a dividend yield of more than 5 percent, has largely avoided exposure to the financial crisis, and has the capacity to ramp up its sale of policies as demand for reinsurance increases.
Reinsurance rates are seen rising by double digits in some markets, and those reinsurers with strong capital positions will be able to scoop up significant business.
Reinsurers assume risk from policies sold by insurers to corporations and individuals, spreading the chance of losses among numerous carriers.
Stock performance for the two rivals shows that investors have similar views. Swiss Re shares are nearly halved over the last 12 months, while Munich Re's stock has lost less than 5 percent, according to the report.
"While Buffett's investment in Swiss Re looks good in the long run, investors seeking more immediate returns should consider Munich Re," Barron's said. (Reporting by Lilla Zuill, editing by Maureen Bavdek)]
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