ZURICH, Switzerland, Mar 13, 2009 (A. M. Best via COMTEX) -- BRK/A | Quote | Chart | News | PowerRating -- Swiss Re shareholder adopted all of management's proposal at the annual meeting in Zurich, Switzerland, including two capital-strengthening proposals.
Shareholders approved the reinsurer's convertible perpetual capital instrument issued to Berkshire Hathaway. Under the terms of the deal, Berkshire Hathaway will essentially make a 3 billion Swiss franc (2 billion euro) investment in Swiss Re via the capital instrument, which will be convertible into Swiss Re shares.
According to the terms of the deal the instrument is perpetual, does not have a term or a maturity date and has no default conditions that would allow it to be accelerated. It has a fixed interest rate of 12% a year, payable semi-annually in arrears in cash, with Swiss Re having the right to defer interest payments.
Berkshire Hathaway will be able to convert the instrument into shares three years after the issue date, based on a conversion price of around 25 francs a share, depending on events such as other rights issues.
Swiss Re has the right to buy the instrument back, either in whole or in increments of at least 20% of the face amount after the second anniversary of the issue date.
Shareholders also approved the creation of a maximum of 160 million francs in conditional capital in order to strengthen its capital base, as well as to increase the share capital of the company over two years by a maximum of 180 million francs in authorized capital. Swiss Re said it does not intend to carry out a rights issue at this time.
The approval of the capital increase means that Swiss Re?s financial strength will be further reinforced, said Peter Forstmoser, chairman of the board of directors of Swiss Re. This will allow us to continue to capture upcoming reinsurance market opportunities and to strengthen our core business even further.
Jakob Baer and John Coomber were reelected to the board for three-year terms.
Swiss Re reported a loss of 864 million francs for 2008 in February (BestWire, Feb. 19, 2009), in the wake of which CEO Jacques Aigrain abruptly resigned his position. He was replaced by Stefan Lippe (BestWire Feb. 12, 2009).
Swiss Re currently has a Best's Financial Strength Rating of A (Excellent).
Berkshire Hathaway Annual Letter to Shareholders 2008 - Read the latest Berkshire Letter
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