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Daily Insurance Industry News
Sunday 19th of August 2018
February 5, 2009

Berkshire Hathaway increases stake in Swiss Re

by Gill Montia

Story link: Berkshire Hathaway increases stake in Swiss Re

Berkshire Hathaway has increased its stake in the world’s second-biggest reinsurer, Swiss Re, which has announced that it expects to post net losses of SwFr1 billion for 2008.

Swiss Re’s capital cushion remains above regulatory requirements but may not be sufficient to maintain its current “AA” rating and the board has therefore announced plans to raise up to SwFr5 billion.

Warren Buffet’s investment vehicle is injecting SwFr3 billion into the group, which may go on to raise an additional SwFr2 billion in a rights issue.

In January of last year, Berkshire Hathaway took a 3% stake in Swiss Re and at the same time secured a reinsurance contract with the group, which had been hit by writedowns from the sub-prime crisis and losses on its investment portfolio.

This latest injection of cash could give Mr Buffet 30% of the business but both his investment and the proposed rights issue will need shareholder approval.

In the third quarter of 2008, Swiss Re posted a surprise loss of SwFr304 million, when analysts had been expecting a profit of around SwFr100 million.

 

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