Financial Market Weakness Will Continue to Affect Results, Says Swiss Re CEO

June 20, 2003

In an in depth interview with Reuters News Agency, Swiss Re CEO, John Coomber said that the ongoing decline in equity values, coupled with low interest rates and the weakness of the U.S. dollar will continue to be a drag on the world’s second largest reinsurer’s earnings.

Coomber told Reuters that even though Swiss Re has introduced a number of cost cutting measures, and has benefited from the rise in premiums during the current hard market cycle, the low return on its investments was still a drag on its financial results.

He did indicate, however, that the recent rise in stock market prices could well decrease the level of any additional writedowns in equity values the company might have to make.

Swiss Re slipped into an overall loss in 2002, directly linked to the fall in investment values and the low interest rates. According to Reuters it carried forward as much as SwF 1.4 billion (around $1 billion) in “impairment charges” into 2003. Coomber declined to comment on their current level, but said the company was “working hard to minimize their impact on this year’s accounts.”

The comments caused a sharp drop in Swiss Re’s shares, but most analysts indicated that the market should have already discounted the factors Coomber cited, as they are well known. In addition the relative strength of the reinsurance industry should be a reassuring factor for investors.

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