In an effort to reduce costs, reinsurer Swiss Re (SWCEY.PK, SWI.L) Thursday said it intends to reduce its current global headcount of 11,560 by about 10% over the next twelve months. The company also named Agostino Galvagni as Chief Operating Officer and Member of the Executive Committee, effective May 1.
The world's second-largest reinsurer added that it would continue to explore opportunities to free up capital to deploy it to the most profitable business segments. At the same time, the Zurich, Switzerland-based company will concentrate on conservatively managing the assets generated through reinsurance activities and continue de-risking the investment portfolio.
With a view to simplifying the organisation and improving operational effectiveness for cost savings, the company will streamline the worldwide office network. Swiss Re will operate through offices that are solely dedicated to servicing clients and will further consolidate support resources into fewer locations to achieve economies of scale.
As reporetd earlier, these restructuring actions are expected to result in running cost reductions of CHF 400 million by the end of 2010.
The new operating chief Galvagni, an Italian citizen, joined Swiss Re's Executive Board in September 2005 and is currently Head of Insurance & Specialty in Client Markets. He began his career as a trainee in Bavarian Re, a former Swiss Re subsidiary. He joined Swiss Re New Markets, New York in 1998, structuring and marketing insurance-linked and asset-backed securities.
Born in 1960, Galvagni returned to Bavarian Re in 1999 as Member of the Board of Management. In 2001, he joined Swiss Re, Zurich, as Head of the Globals Business Unit and member of the Europe Division Executive Team. He was appointed to the Executive Board with effect from September 2005 to head the newly formed Globals & Large Risks Division within the Client Markets Business Function.
Commenting on the appointment, Stefan Lippe, Swiss Re's Chief Executive Officer, said: Business focus and delivery of results have always been the hallmark of Agostino Galvagni, and we are delighted that he will strengthen our leadership team. He brings in-depth business and client servicing experience to this role. Agostino Galvagni will help to apply best practice in staying client focused, while we are accelerating our plan to build a stronger firm.
Swiss Re said last month that its chairman Peter Forstmoser decided to resign from the Board, as of May 1, to be succeeded by Walter Kielholz, who was until then a Vice Chairman. Mathis Cabiallavetta, member of the Board of Directors, was appointed Vice Chairman as of the date of the Annual General Meeting.
The resinsurer has been having a tough time due to investment losses in the recessionary environment. In February, the company reported a net loss for full year 2008, compared to a net profit last year, and added that the Board proposes to reduce dividend to further strengthen the capital position. The company's net loss for 2008 was CHF 864 million, or CHF 2.61 per share, compared to a net profit of CHF 4.16 billion, or CHF 11.95 per share, in the prior year. Total revenues declined 42% to CHF 24.98 billion from CHF 42.87 billion.
Recently, Swiss Re said Warren Buffett's Berkshire Hathaway agreed to make a CHF 3.0 billion investment in the company. The instrument is perpetual, and so does not have a maturity date or term. It will cease to be outstanding when it is converted in full by Berkshire Hathaway, or repurchased or redeemed in full by Swiss Re.
SWCEY.PK closed Wednesday's regular trade at $17.05, up $0.45 or 2.71%, on 74,683 shares.
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