CDS losses hit Swiss Re

Despite the losses, the insurer maintained its AA- rating from credit rating agency, Standard and Poor’s. At the same time last year, it announced a net profit of SFr 1.5 billion.

In the third quarter, Swiss Re saw mark-to-market losses of SFr 289 million on structured credit products - the mark-to-market value of the insurer's portfolio of asset-backed and mortgage-backed securities declined from SFr 2.23 billion to SFr 1.95 billion, due mainly to losses on commercial and residential mortgage-backed products, Swiss Re said.

The operating result for the property and casualty division more than halved to SFr 710 million, down from SFr 1.8 billion in the second quarter of 2008. This was not helped by an expected $365 million worth of claims from hurricanes Ike and Gustav.

The life and health division’s operating result also fell to SFr 22 million from SFr 868 million in the second quarter of this year. Swiss Re blamed higher mortality rates in North America, as well as net investment losses of SFr 572 million that have resulted from the financial crisis.

The reinsurer has suspended its SFr 7.75 billion share buy-back program due to high volatility in the financial markets and a rise in demand for reinsurance. The company said it could still complete the buy-back by April 2010, but preferred to keep hold of excess capital in the meantime.

See also: Protection policies
Swiss Re loses another SFr819 million on two CDSs
Swiss Re admits $1.07 billion loss on two portfolio CDSs

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• Topics
• Foreign exchange
• Structured products
• Credit derivatives