Swiss Re Has $1.07 Billion Credit-Default Swaps Loss

Swiss Reinsurance Co., the world's biggest reinsurer, had a 1.2 billion-Swiss franc ($1.07 billion) loss on derivatives in October after the U.S. subprime mortgage crash roiled debt markets.

Swiss Re fell the most in almost 4-1/2 years in Zurich trading after the loss, which amounts to 981 million francs after tax. Losses occurred on two credit-default swaps Swiss Re sold to protect clients against declines in mostly mortgage-related investments, the Zurich-based company said today.

``We clearly made some poor choices,'' Roger Ferguson, the former U.S. Federal Reserve governor who runs Swiss Re's financial services division, told analysts on a conference call. Swiss Re's loss came less than two weeks after the company reported third-quarter profit that surpassed analysts' estimates.

``This is a surprise, particularly given their so recent reporting,'' said Richard Hewitt, an analyst at Dresdner Kleinwort who rates Swiss Re ``buy.''

Swiss Re shares fell as much as 6.9 percent, the biggest drop since June 2003, and were down 6.30 francs to 91.25 francs by 11:48 a.m. The stock has fallen 12 percent this year, matching the slump in the 28-member Bloomberg Europe 500 Insurance Index.
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