Swiss Re takes $878M subprime hit

The October loss stems from a pair of credit default swaps written by the firm’s Credit Solutions unit.
NOV 19, 2007
By  Bloomberg
Swiss Reinsurance Co. today reported that it lost $878 million after taxes due to its subprime-mortgage exposure. The loss, which occurred in October, stemmed from a pair of credit default swaps written by the Zurich-based firm’s Credit Solutions unit. The swaps were made to protect portfolios against a risk of loss, but the mortgage crisis has made the value of the underlying assets plummet, Swiss Re said. These portfolios contained mostly mortgage-backed securities, including some exposure to subprime and asset backed securities in the form of collateralized debt obligations. Swiss Re has marked down the ABS CDOs to zero, while the subprime assets have lost 62% of their original value. The market value of the portfolio is now $5.4 billion. Still, Swiss Re will stick with its targets: a 10% rise in earnings per share and a year-end return on equity of 13%.

Latest News

Retirement delays, Social Security fears prompt advisors to rethink income strategies
Retirement delays, Social Security fears prompt advisors to rethink income strategies

Concerns about outliving savings and healthcare costs are reshaping how "Peak 65" Americans and advisors approach income planning.

Merrill Lynch on the hook for $3.7M after clients claimed sale of unsuitable private equity
Merrill Lynch on the hook for $3.7M after clients claimed sale of unsuitable private equity

Some investors recently have seen million dollar plus decisions by FINRA arbitration panels involving complex products decisions go their way.

Barred ex-Merrill Lynch advisor arrested in alleged $2.6M theft of former Miami Dolphin Pro Bowler
Barred ex-Merrill Lynch advisor arrested in alleged $2.6M theft of former Miami Dolphin Pro Bowler

Former advisor Isaiah Williams allegedly used the stolen funds from ex-Dolphins defensive safety Reshad Jones for numerous personal expenses, according to police and court records.

RIA moves: Modern Wealth tops $8.5B AUM as Aspen expands in Connecticut
RIA moves: Modern Wealth tops $8.5B AUM as Aspen expands in Connecticut

Modern Wealth's latest deal for a California-based fee-only RIA marks its fourth acquisition of 2025.

Empower defends private market access in 401(k)s in response to Warren scrutiny
Empower defends private market access in 401(k)s in response to Warren scrutiny

Sen. Warren has warned of private market investment risks due to opacity, illiquidity, and past regulatory issues.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.