WSJ: Swiss Re CEO Aigrain Resigns, Takes Responsibility for Losses

By LIAM PLEVEN and NEIL SHAH

Jacques Aigrain, whose push for growth at Swiss Reinsurance Co. ended with big losses and a plummeting share price, said faltering investor confidence in his leadership left him little choice but to tender his resignation as chief executive.

In an interview, Mr. Aigrain said he offered to step down because it was in the best interests of the firm, adding there was a risk shareholders would "not automatically trust" that he could "facilitate the full turnaround" of the Zurich-based reinsurer.

By submitting his resignation, Mr. Aigrain is taking responsibility for the 62% slide in the firm's shares this year, caused in part by losses from its forays beyond traditional insurance.

Jacques Aigrain

Mr. Aigrain, a former J.P. Morgan Chase & Co. banker who joined Swiss Re in 2001 and became CEO in 2006, said he is "obviously very sad" to leave the firm, and he has no "predefined plans" for his next professional move.

The move came just a week after Mr. Aigrain secured a $2.6 billion infusion from billionaire Warren Buffett's Berkshire Hathaway Inc., a deal that could leave Berkshire with a 20% stake in the company.

At the time of the Feb. 5 agreement with Buffett, the billionaire investor expressed his support for Mr. Aigrain. The news release announcing the deal quoted Mr. Buffett as saying he is "very impressed by Jacques Aigrain and his management team." Mr. Buffett declined to comment Wednesday.

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The Buffett investment coincided with an announcement by Swiss Re that it will report a loss of about one billion Swiss francs for 2008, and may cut its dividend. Standard & Poor's put the firm's credit rating on watch for a possible downgrade.

While the global financial crisis has battered other large firms, Swiss Re's troubles have been exacerbated by its move into more complex instruments that tumbled in value as markets swooned.

The company, whose core reinsurance business involves selling policies to other insurance companies that protect them against losses, moved into investment banking-style activities such as writing credit-default swaps, the same instruments that felled American International Group Inc.

Those credit default swaps, a form of insurance against losses on other investments, have been particularly problematic for Swiss Re. The company recognized about six billion francs in losses on the swaps and other activities in 2008.

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Under Jacques Aigrain, the Zurich firm increased its risk profile.

"At the end of the day, the responsibility stops on my desk," Aigrain said of the credit-derivatives losses.

Mr. Buffett agreed last week to inject money into Swiss Re, helping bolster the company's capital and giving the billionaire investor a high-yielding bond that can be converted into stock in three years. If converted, Mr. Buffett's Berkshire Hathaway, which already has at least a 3% stake in Swiss Re, would significantly increase his holdings.

Despite Swiss Re's stumbles, Mr. Aigrain had been bullish about the company's prospects.

In recent months, he had talked about how the company was hunting for potential acquisitions to take advantage of the turmoil in the industry. The company last year bought an insurance unit from U.K. bank Barclays PLC.

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