Hard times

26 March 2003 By Chris Hughes

Munich Re has done little to quash speculation that it may need to have a rights issue. Swiss Re has ruled out a rights issue and cut its dividend. In fact, it’s too soon to know whether either will be tapping shareholders.

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Swiss Re, the world's second largest reinsurer, said it was cutting its dividend to SFr1 in 2002, from SFr2.50 in the prior year. The cut was previously flagged by the company, but its severity was greater than market expectations. Swiss Re reported a fullyear loss of SFr91m after writing down SFr3.9bn.

Munich Re, the world's largest reinsurer, posted fullyear operating profits of E1.1bn for last year, up from E250m in 2001. Total writedowns on securities were E5.7bn. Munich Re is to hold its dividend at E1.25 per share for 2002.

Fitch Ratings assigned expected subordinated debt ratings of AA to Munich Re's proposed bond issue announced last week.

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