JOHN COOMBER, chief
executive of Swiss Re, the worlds
second largest reinsurer, yesterday gave
warning that capital markets could close
to cash-starved insurers, amid a wave of
new demands for funds.
Mr Coomber told The
Times that investors were
increasingly aggravated by demands for
cash from the general insurance industry.
I am concerned that investors are
saying to the industry youve
got legacy issues. We dont want to
fill holes in your reserves. We want to
invest in new growth.
Coombers comments could not have
come at a worse time for Royal &
SunAlliance which on Monday will ask
shareholders to agree to a rights issue
that would see existing investors part
with £940 million to plug a £800
million hole in its reserves, largely due
to losses in the US.
shareholders are furious that the insurer
is seeking cash to fill holes because of
warning also comes as Munich Re, the
worlds largest reinsurer, is
understood to be preparing to raise up to
4 billion (£2.8 billion). Analysts
believe that the reinsurer wants the
capital to shore up its weakened balance
French insurer, saw its shares rise 2 per
cent as it announced a 1.4 billion
rights issue. But analysts said investors
welcomed the announcement because AXA
plans to spend the cash on buying MONY
Group, the US life insurer, in an attempt
to expand its US business. The £1.5
billion bid price was condemned as
excessively low by MONY shareholders.
UKs largest insurer, is also
expected to announce a larger than
expected issue of subordinated debt,
raising £1.6 billion rather than the
£1.2 billion signalled last week.
is one of the healthier firms in the
capital-depleted reinsurance sector,
according to credit rating agencies. The
group has avoided big capital raising
since a $4.43 billion (£2.7 billion)
share placing in 2001, although it has
cut its dividend by 60 per cent this year
to preserve capital.
property and casualty insurers have lost
$200 billion of their reserves over the
past two years in the wake of falling
stock markets and increased levels of
claims. The erosion of capital has led to
a wave of fundraising.