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Swiss Re to trim 10% of global staff

SWISS Re, the world's second-largest reinsurer, said yesterday that it planned to shrink costs by cutting about 10 percent of its 11,560 global staff over the next year.

Swiss Re said in February that it was targeting 400 million Swiss francs (US$349.6 million) of cost cuts by 2010.

Zurich-based Swiss Re also said it would promote executive board member Agostino Galvagni to be chief operating officer.

"The quality of these cost savings is better than I expected," said Kepler Capital Markets analyst Fabrizio Croce, who has a "hold" rating on the company.

ZKB analyst Georg Marti, who has an 'underweight' rating on the stock, hoped the reduction of staff would only have a limited impact on sales.

"The job cuts are expected to focus mainly on back office and similar functions rather than on the company's relationship managers," he said.

Shake up

Galvagni's appointment is the latest step in a management shake up which saw the ousting in February of chief executive Jacques Agrain in favor of reinsurance expert Stefan Lippe, who vacated his COO role. "It is good news that the company seems to be pushing on with its stated program to return to the fundamentals of reinsurance," said Croce.

The management moves are part of Swiss Re's efforts to reorganize the business after a 2008 loss of 1 billion Swiss francs and a 6-billion-Swiss-franc writedown on toxic assets.

The losses forced the company to accept 3 billion Swiss francs of new capital from billionaire United States investor Warren Buffet.

Last month, the reinsurer announced that former Swiss Re CEO and current vice chairman Walter Kielholz will become its new chairman.

The appointment of Kielholz, who is also the chairman of Credit Suisse Group, was criticized by investors as an indication that the company failed to break with the past after a disastrous adventure into the investment banking business.


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