Swiss Re to axe 2,000 jobs

The GE purchase has made Swiss Re the world's biggest reinsurer Keystone

Swiss Re has announced it will cut up to 2,000 jobs, one in five of its workforce, by 2007 following its recent takeover of US-based GE Insurance Solutions.

This content was published on July 11, 2006 - 08:25

The world's largest reinsurer said on Tuesday that it had already cut over 250 posts, about 40 of which were in Zurich. Over the next four months the company plans to finalise the two-phase restructuring of its worldwide operations.

"The job reductions will contribute to increasing Swiss Re's overall efficiency and ensuring the company's competitiveness," the firm said in a statement.

"Obviously when we integrate GE Insurance Solutions into Swiss Re there is some overlap in certain functions and also potential to increase the efficiency of the overall company," Henner Alms, a spokesman for Swiss Re, told swissinfo.

The layoffs and restructuring will mostly affect large office locations including Zurich, London, Armonk (New York) and Kansas City.

The restructuring, which is due to be finalised by the end of 2007, will take place in two phases.

Since the takeover more than 250 jobs, mainly managerial posts, have been cut. Of these about 40 people have been made redundant at the Zurich office, said Swiss Re.

In a second phase to be completed over the next four months, Swiss Re will shed an additional 1,750 posts worldwide.

"This move is part of the integration of GE Insurance Solutions into the Swiss Re group. Beyond that we have not announced any additional restructuring measures," a company spokesman told Reuters.

In a first reaction, the Swiss commercial employees' association said that cutting 20 per cent of the workforce was simply irresponsible.

"Firms have a social responsibility," said the association's Barbara Gisi.

The association complained it had not been consulted over the move.

The announcement also came as a surprise to analysts. "The extent of the job cuts is not in line with the culture up to now at Swiss Re and so is something new," Georg Marti told the AP news agency.

World's largest

Swiss Re last month completed the purchase of General Electric's insurance solutions unit to create the world's largest reinsurer.

The deal, announced last November, puts Swiss Re ahead of German rival Munich Re and gives it a commanding position in the United States.

At the time it announced the deal, the Swiss company said it expected cost synergies of at least $300 million (SFr371 million) a year, within 18 months.

It said it would likely cut about 1,500 jobs as part of the takeover, but did not expect positions in Switzerland to be affected.

Swiss Re has a workforce of 8,900 around the world.

Swiss Re paid $7.4 billion in cash and securities plus $1.7 billion in assumed debt for the GE unit, which has 2,500 employees in 22 countries.

As part of the deal, General Electric holds a nine per cent stake in the Zurich-based company.

swissinfo with agencies

In brief

Reinsurance is basically the business of insuring the insurers. Swiss Re insures large or very volatile risks for other insurance companies. Its major competitor is Munich Re of Germany.

Apart from being one of the world's leading reinsurers, Swiss Re is the world's largest life and health reinsurer.

Swiss Re has been in the business of reinsurance since it was founded in Zurich in 1863.

The deal with GE Insurance Solutions will bring Swiss Re's estimated combined revenues to SFr46 billion and assets of SFr265 billion (as of June 2005).

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Key facts

Swiss Re paid $7.4 billion in cash and securities plus $1.7 billion in assumed debt for GE's insurance unit.
The combined groups now have a total of 11,400 employees.
The GE arm currently operates with 2,500 employees in 50 offices in 22 countries, while Swiss Re has a global workforce of 8,900.

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