Swiss reinsurance firm loses over $1 billion
Lossses continue to pile as the Swiss company, Swiss Reinsurance Co., the world’s largest reinsurer announces having lost $1.07 billion due to US subprime mortgage problems.
Swiss Re fell the most in more than 4 1/2 years in Zurich trading on the loss, which amounts to 981 million francs after tax. Losses occurred on two credit-default swaps Swiss Re sold to protect clients against declines in investments backed mostly by mortgages, the Zurich-based company said today.
“We clearly made some poor choices,” Roger Ferguson, the former U.S. Federal Reserve governor who runs Swiss Re’s financial-services division, told analysts on a conference call. The loss comes less than two weeks after the company, headed by Chief Executive Officer Jacques Aigrain, reported third-quarter profit that surpassed analysts’ estimates.
The 144-year-old Swiss Re earns almost two-thirds of its premium income from helping shoulder property-and-casualty risks for insurers such as Allianz SE. The company’s financial-services unit, which provides risk and capital management, structured investments and investment-banking services, had a 113 million- franc loss in the third quarter, it said Nov. 6.
For a 144 year old firm, it seems fairly ridiculous that such a mistake could have been made investing in subprime 1st and 2nd mortgage loans.
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