Swiss Re Downgraded by S&P After ‘Capital Depletion’

Swiss Re Downgraded by S&P After ‘Capital Depletion’: "Swiss Reinsurance Co., the world’s second-biggest reinsurer, was downgraded by Standard & Poor’s after record losses forced the company to raise capital from Warren Buffett’s Berkshire Hathaway Inc.

The reduction of credit and financial-strength ratings to A+ from AA- reflects “greater-than-anticipated capital depletion,” S&P said today in a statement on the Zurich-based firm. “These developments are symptomatic of Swiss Re’s greater tolerance for financial risk than its peers.”

The downgrade comes two weeks after Buffett said he was “very impressed” by Swiss Re’s management and announced his Berkshire was injecting 3 billion Swiss francs ($2.6 billion) into the reinsurer. Swiss Re is abandoning a strategy to increase profit by trading securities such as credit-default swaps, which led to a loss of about 1 billion francs in 2008.

Swiss Re replaced Chief Executive Officer Jacques Aigrain Feb. 12 as the reinsurer’s shares fell by more than a third after announcing the loss and Buffett’s investment earlier this month.

Swiss Re, which became the world’s biggest reinsurer after buying GE Insurance Solutions in 2005, now has less than a quarter of the market value of competitor Munich Re. "

Source: Bloomberg.com

Atrium opens Singapore office

Atrium opens Singapore office: "Atrium Underwriting Group Ltd. has opened an office in Singapore to underwrite business on behalf of Atrium’s Lloyd’s of London syndicate 609.

Richard Young, previously a marine underwriter at Atrium, has been appointed chief executive officer and underwriter of the office.

Atrium said the office would source local business that would be unlikely to come to the London market."

Source: Business Insurance

Swiss Re director Kielholz seen under pressure

Swiss Re director Kielholz seen under pressure: "Pressure is growing on Swiss Re's (RUKN.VX) deputy chairman, Walter Kielholz, to step down and pay the price for the reinsurer's costly dabbling in risky assets.

Swiss Re jettisoned its chief executive, Jacques Aigrain, last week, following the announcement of a large full-year loss and hefty writedowns, but analysts and company insiders say that may not be enough to satisfy investors. [ID:nLC532472]

'The foray into investment banking has been a disaster,' said a source at Swiss Re, the world's second-largest reinsurer.

Kielholz, a former Swiss Re CEO who is also chairman of Credit Suisse (CSGN.VX), is closely linked to the appointment of Aigrain and the move into investment-banking style products.

Kepler Capital Markets analyst Fabrizio Croce said: 'Good managers take responsibility for wrong strategic choices. The best way for some responsible board members to create value is by leaving.

'The reputational damage that the board members of Swiss Re provoked and the loss of trust can't be repaired by them,' he said."

Source: Reinsurance

IAG in A$450m capital raising

IAG in A$450m capital raising: "Insurance Australia Group (IAG), said that it has raised A$450m from institutional investors in an effort to give it capital room.

The group's discounted rights issue offer to shareholders of A$3 per share would be used to improve the capital mix and provide additional financial flexibility, IAG's chief executive Michael Wilkins said.

'We see these capital management initiatives as prudent means of providing the group with additional financial flexibility in an environment where financial market conditions remain challenging,' he said in a statement.

IAG will also buy back A$250m of subordinated debt.

The group said that it has received over 2,000 so far from the Australian bush fires which wreacked havoc in some Australian states- as well as claiming the lives of 200 people. It said its exposure net of reinsurance will be capped at A$126m."

Source: Reinsurance

Ironshore, Berkshire partner on environmental cover

Ironshore, Berkshire partner on environmental cover: "Ironshore Environmental, a newly formed division of property and casualty insurer Ironshore Inc., said Tuesday it had reached an agreement that would allow it to provide environmental insurance contracts of over five years.

The Bermudian insurer has entered into an arrangement with National Fire & Marine Insurance Co., a Berkshire Hathaway Inc. company, for longer-term environmental insurance placements.

Under the arrangement, Ironshore will market, engineer and underwrite all risks with a term of five years or more, the company said.

“Certain transactions that require longer-term environmental insurance also demand the highest financial strength in the insurance carrier,” said Joe Boren, chief executive officer of Ironshore Environmental, in news release."

Source: Business Insurance

Four bidders in fray for AIG's Philippine assets-sources

Four bidders in fray for AIG's Philippine assets-sources : "MANILA, Feb 18 (Reuters) - U.S. insurer American International Group (AIG.N) has shortlisted four potential buyers for its Philippine life insurance business, sources familiar with the negotiations said on Wednesday.

The likely bidders for Philippine American Life and General Insurance Co (Philamlife) are the Bank of the Philippine Islands (BPI.PS), Banco de Oro Unibank (BDO.PS), Toronto-based Manulife Financial Corp (MFC.TO) and an unidentified foreign investor, the sources, who did not want to be identified because they were not authorised to talk to media, told Reuters."

Source: Reuters