Buffett’s capital response in Swiss Re’s hour of need

Although there was no gloating at Swiss Re’s predicament from the Bermudian companies, there were some that expected to benefit from it. These companies include Axis with its newly minted A+ rating from S&P. However, despite all the drama around several companies (not only Swiss Re), the indications are that it is not that easy for rival reinsurers to get their clients to reshuffle their panels. The likely result is that business will remain stable for Swiss Re and for many of its competitors

The scale of Swiss Re’s losses revealed in its shock preliminary announcement of 2008 results has made other reinsurers seem like models of sober prudence. Most of those which have reported have succeeded in making a profit and largely preserving their capital whereas Swiss Re has managed to lose more than a third of its shareholders’ equity in 2008.