Buffet buys 3% stake in Swiss Re
Billionaire Warren Buffet's investment company has acquired 11.25 million shares in Swiss Reinsurance Co on the open market.
23 January 2008
ZURICH - Billionaire investor Warren Buffett has bought a 3% stake in Swiss Reinsurance Co, the world's largest reinsurer said Wednesday.
Buffet's investment company, Berkshire Hathaway Inc, acquired the 11.25 million shares on the open market through its subsidiary Columbia Insurance Co, Swiss Re said in a statement.
Officials at the Zurich-based company declined to say how much Columbia paid for the shares, which closed up more than 7% on Tuesday at 73.60 Swiss francs (US$67.40; 46.50).
Shares in Swiss Re were up 4.6% at 77 francs (US$70.50; 48.64) on the Zurich exchange. At that rate, Buffett's stake would be worth 866.25 million francs (US$793.1 million; 547.2 million).
Swiss Re said a separately negotiated proportional reinsurance contract agreed with Berkshire Hathaway would free up capital that will be used to finance a further share buyback of 1.75 billion francs (US$1.58 billion; 1.09 billion) over the next two years, in addition to a previously announced buyback program worth over 6 billion francs (US$5.5 billion; 3.8 billion).
Reinsurance companies sell backup coverage to other insurers, spreading risk so the system can handle huge losses from major disasters.
Swiss Re said in November that it expects to post a full-year net profit for 2007 despite being forced to make writedowns because of exposure to the subprime mortgage crisis.
[Copyright ap 2008]