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… as S&P lowers its credit rating

Standard & Poor’s (S&P) has scaled back its long-term credit rating on Swiss Re from AA- to A+ after the reinsurance giant leaked capital throughout last year.

S&P credit analyst Peter Grant says the credit ratings agency acted in response to Swiss Re’s “much greater than anticipated” capital depletion during 2008 which has resulted in capital-raising initiatives.

Mr Grant says S&P identified “potential adverse flow-on effects, particularly on the group’s future earnings and financial flexibility”.

Earlier this month Swiss Re moved to shore up capital through a CHF3 billion ($3.98 billion) convertible bond issue to US insurance giant Berkshire Hathaway.  

The three-year convertible notes could see the company owned by investment guru Warren Buffett raise its stake in Swiss Re from about 3% to more than 20%.

S&P says Swiss Re’s initiatives to restore capital adequacy could soon restore the double-A rating.