Swiss Re reports expected net loss of CHF 1 billion

Swiss Re Group is expecting to report a net loss for 2008 of roughly CHF1 billion (roughly the same in Canadian dollars).
Significant measures are being taken to reinforce the company’s capital strength, which includes raising roughly CHF$3 billion of capital from Berkshire Hathaway Inc., subject to shareholder approval, the Group notes in a release.
Swiss Re’s strong underwriting performance was offset by negative investment results, primarily due to mark-to-market losses recognized in income and impairments on its investment portfolio.
‘’We are disappointed with our overall results in 2008, but our core business — property and casualty and life and health — is performing well,’’ Jacques Aigrain, Swiss Re’s CEO, said in a release. ”We have taken steps to protect our capital strength to ensure the continued trust of our clients, and we continue to manage our business in a disciplined, conservative manner. Warren Buffett’s agreement to invest in Swiss Re is a testament to the strength of our franchise.’’
The company reported an expected full-year combined ratio of 97.4% (95.6% excluding unwind of discount) in its property and casualty lines, according to the release.
Following Swiss Re’s announcement, A.M. Best placed the financial strength rating of A+ of Swiss Re and its similarly rated subsidiaries under review with negative implications.
The ratings agency has also placed all debt issued or guaranteed by Swiss Re and its subsidiaries under review with negative implications.
A.M Best said it assigned a negative outlook to Swiss Re’s ratings on Dec. 19, 2008, due to concerns that continuing turmoil in the markets could further erode the company’s capital position and negatively impact earnings for 2009.
Swiss Re’s announcement regarding its actions to initiate several asset de-risking and capital strengthening initiatives — including the investment by Berkshire Hathaway — have prompted the ratings agency to place these ratings under review, according to A.M. Best.