Buffetted by losses, Swiss Re raises capital
US investor Warren Buffet will figure prominently in a big capital injection at Swiss Re, which last week flagged a loss of CHF1 billion ($1.3 billion) for the 2008 year.
“The group is taking significant measures to reinforce its capital strength,” the world’s number two reinsurer said in a statement.
“In addition to ongoing de-risking in its investment portfolio, the group is raising CHF3 billion ($3.9 billion) of capital from (Warren Buffet’s) Berkshire Hathaway Inc… and will consider further equity raising of up to CHF2 billion ($2.6 billion), subject to market conditions.”
Swiss Re says it has surplus regulatory capital, but it estimates that at December 31 last year it was between CHF1.5 billion ($1.9 billion) and CHF2 billion ($2.6 billion) below the level required to maintain its current AA rating.
“We are disappointed with our overall results in 2008, but our core business – property and casualty and life and health – is performing well,” CEO Jacques Aigrain said.
The group’s strong underwriting performance was offset by bad investment results, primarily due to mark-to-market losses recognised in income and impairments on its investment portfolio.
Mr Aigrain says the global demand for reinsurance has increased as many clients seek protection to offset the erosion of their capital.
“The group expects to report an increase in rates of around 2%, leading to a volume increase of around 6%, at constant foreign exchange rates,’’ he said.
“The group is taking significant measures to reinforce its capital strength,” the world’s number two reinsurer said in a statement.
“In addition to ongoing de-risking in its investment portfolio, the group is raising CHF3 billion ($3.9 billion) of capital from (Warren Buffet’s) Berkshire Hathaway Inc… and will consider further equity raising of up to CHF2 billion ($2.6 billion), subject to market conditions.”
Swiss Re says it has surplus regulatory capital, but it estimates that at December 31 last year it was between CHF1.5 billion ($1.9 billion) and CHF2 billion ($2.6 billion) below the level required to maintain its current AA rating.
“We are disappointed with our overall results in 2008, but our core business – property and casualty and life and health – is performing well,” CEO Jacques Aigrain said.
The group’s strong underwriting performance was offset by bad investment results, primarily due to mark-to-market losses recognised in income and impairments on its investment portfolio.
Mr Aigrain says the global demand for reinsurance has increased as many clients seek protection to offset the erosion of their capital.
“The group expects to report an increase in rates of around 2%, leading to a volume increase of around 6%, at constant foreign exchange rates,’’ he said.