Swiss Re transfers part of US life insurance bus.
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Swiss Reinsurance Co. said Monday it transferred part of its U.S. life insurance business to American investor Warren Buffett’s Berkshire Hathaway Inc. for 1.3 billion Swiss francs (US$1.27 billion) to free up capital and invest it more profitably. The deal with Buffett’s company, which already has a stake in Swiss Re, takes effect retroactively on Oct. 1, 2009. It has freed up 300 million francs ($292 million) in capital, Swiss Re said. The transaction known as "retrocession" means that Swiss Re transfers the business to another reinsurer—Berkshire Hathaway. Reinsurance companies sell backup coverage to other insurers, spreading risk in the event of huge losses. The life insurance business had failed to meet Swiss Re’s hurdle rate of 14 per cent returns, the company said.
