Thursday, February 05, 2009
An Oracle hugging Gnomes...Swiss Re continued
I thought in my Dec. 16 post that governmental capital infusion was imminent...turns out they got the next best thing.
Swiss Re to get $2.6B from Buffett, warns of loss
Swiss Re to receive $2.6 billion capital injection from Warren Buffett after full-year loss
Thursday February 5, 2009, 8:28 am EST
ZURICH (AP) -- Swiss Reinsurance Co. said Thursday it will get a capital injection of 3 billion Swiss francs ($2.6 billion) from U.S. financier Warren Buffett after warning investors it expects to lose 1 billion francs ($869 million) for the full year.
The company, which based its expected net loss on preliminary figures, said it will seek a further 2 billion francs on the capital markets.
Writedowns of approximately 6 billion francs ($5.2 billion) for the full year offset strong underwriting performance, Swiss Re said.
Investors reacted to the news by dumping the company's stock, which fell 24.40 percent to 22.80 francs ($19.62) on the Zurich exchange in morning trading.
"We are disappointed with our overall results in 2008, but our core business -- Property and Casualty and Life and Health -- is performing well," said Chief Executive Jacques Aigrain.
"We have taken steps to protect our capital strength to ensure the continued trust of our clients," he said in a statement. "Warren Buffett's agreement to invest in Swiss Re is a testament to the strength of our franchise."
Buffet has long-standing interests in the insurance business, including General Re Corp.
Through his Omaha, Nebraska-based company Berkshire Hathaway Inc., Buffett already holds a 3 percent of Swiss Re shares. The increase in stake is subject to approval by Swiss Re's shareholders.