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Swiss Re to Repay CPCI Ahead of Schedule
Practices
As part of the announcement of its third-quarter earnings, our client Swiss Reinsurance Company Ltd has announced that it had agreed with Berkshire Hathaway to repay a CHF 3.0 billion convertible perpetual capital instrument (CPCI) ahead of its first scheduled repurchase date.
Berkshire Hathaway had provided CHF 3.0 billion (approximately US$3.0 billion) in capital to Swiss Re via the CPCI in March 2009 following the downgrade of Swiss Re's credit ratings and during ongoing turmoil in the financial markets. This unique instrument provided Swiss Re with the regulatory capital, rating agency and accounting treatment that it needed based on the instrument's subordinated, perpetual hybrid capital characteristics, while providing Berkshire Hathaway with an instrument resembling preferred stock that a U.S financial institution might issue.
The London-based team handling the termination of the CPCI included partner Mark Bergman. Jeff Samuels provided tax advice in respect to various aspects of the CPCI.