Posted on 12 Feb 2009
On the heels of Swiss Reinsurance Co turning to Warren Buffett for capital amid record losses that wiped out more than one third of the reinsurer's market value in one week, Chief Executive Officer Jacques Aigrain resigned. The board of directors accepted Aigrain’s offer to resign and named deputy CEO Stefan Lippe, 53, as his successor, according to Swiss Re.
The departure comes a week after Buffett, chairman and CEO of Berkshire Hathaway Inc., said he was “very impressed” by Aigrain’s team and announced that was injecting 3 billion Swiss francs ($2.6 billion) into the reinsurer. Swiss Re said Feb. 5 it had a full-year loss of about 1 billion francs and will abandon Aigrain’s strategy to increase profit by trading securities such as credit-default swaps, which led to write-downs of 6 billion francs in 2008.
“When a bad situation turned into a dramatic one, they had to act,” said Thomas Noack, an analyst at WestLB Equity Markets in Dusseldorf who has an “neutral” rating on the shares. “Lippe is a real reinsurance guy, which is exactly the right and reassuring signal they need to send at this moment.”
Swiss Re rose 4 percent, to 19.7 francs at 2:15 p.m. in Swiss trading, paring this year’s decline to 61 percent.
“This is the first positive news” since the reinsurer’s initial writedown announcement in November 2007, Fabrizio Croce, an analyst at Kepler Capital Markets, wrote in a note to investors. “The road to recovery will be long and difficult,” said Croce, who upgraded Swiss Re to “hold” from “reduce.”
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 rival Munich Re.
Lippe, a German national, has been with Swiss Re for 25 years. He joined the executive board in 1995 and led Swiss Re’s property and casualty and life and health underwriting since 2005. He became chief operating officer in September 2008.
“I am clear about the challenges that Swiss Re needs to address,” Lippe said in the statement. “Our core reinsurance portfolio is sound.”
Lippe “is an ideal candidate to lead the ‘Back to Basics’ charge,” Spencer Horgan, an analyst at Deutsche Bank AG in London, wrote in a report to clients. He raised Swiss Re to “buy” from “hold.”