Swiss Re writes down $5.3bn
Zurich, February 5, 2009
Swiss Re wrote down 6 billion Swiss francs ($5.25 billion) in toxic assets and said Warren Buffett was investing 3 billion Swiss francs as its shareholder's equity dipped to an uncomfortable level.
The world's second-largest reinsurer said on Thursday it made a 2008 net loss of around 1 billion francs and that it would disband its financial markets activities.
A second Swiss insurer, Zurich Financial Services, reported a 23 percent fall in business operating profit for 2008, missing forecasts, cut its dividend and announced more cost cuts.
Swiss Re sought additional capital after saying its shareholders' equity at the end of 2008 was estimated at between 19 billion to 20 billion francs, below the level needed for an AA rating.
It said it would reorganise its financial markets activities into two new businesses, including a legacy unit which will manage structured credit default swaps (SDC) and other toxic assets after the 6 billion franc writedown for the full year.
Swiss Re's announcement was unexpected and follows pressure on its shares in recent weeks as investors worried about possible writedowns and the need for fresh capital.It had been expected to announce full-year results on Feb. 19.
Zurich cut its dividend to 11 Swiss francs ($9.62) per share from 15 francs for 2007 and announced a further $200 million in cost cuts.
Zurich's general insurance gross written premiums rose 4 percent to $37.2 billion.
The company's combined ratio, which measures costs and claims as a percentage of premium income, rose to 98.1 percent at end-2008, from 95.6 percent a year earlier. The lower the benchmark, the higher Zurich's underwriting profitability. - Reuters