Swiss Re to slash 10 per cent of workforce, appoints new COO
02 April 2009
Swiss Reinsurance Co. said Thursday it would cut 10 percent of its workforce this year in a bid to reduce costs and simplify its operations. The world's second-largest reinsurance company, which currently has 11,560 employees, also announced the appointment of Agostino Galvagni as new chief operating officer.
The group, recently in the news for selling a major stake to legendary investor Warren Buffett (See: Warren Buffett invests $2.6 billion in Swiss Re), posted a record annual loss of 864 million Swiss francs ($735 million) in 2008, as earnings were hit by investment losses (See: Swiss Re reports $1.5 billion Q4 loss). Its CEO Jacques Aigrain announced his resignation a week after it posted its earnings in February and was replaced by the group's deputy and chief operating officer Stefan Lippe. (See: Buffett investment fails to save Swiss Re CEO's job)
Swiss Re had invested heavily in securities backed by US mortgages to people with shaky credit and was exposed to bailed-out insurance firms, such as American International Group and the now-defunct US investment bank Lehman Brothers.
The management moves are part of Swiss Re's efforts to reorganise the business after a 2008 loss of 1 billion Swiss francs and a 6 billion franc write-down on toxic assets forced the company to accept 3 billion francs of new capital from Buffett.
The Zurich-based group added that it was "accelerating efforts to simplify the organisation and improve operational effectiveness." "As previously announced, this will lead to running cost reductions of 400 million francs by the end of 2010," it said.
Last month, the reinsurer announced that former Swiss Re CEO and current vice chairman Walter Kielholz would become its new chairman. The appointment of Kielholz, who is also the chairman of Credit Suisse, was criticized by investors as failing to break with the past after a disastrous foray into investment banking brought Swiss Re to its knees.
Reinsurance companies sell backup coverage to other insurers, spreading risk in the event of huge losses.