Zurich’s ‘Impairment’ from Sigma Default $275 Million; WaMu $45 Million

Zurich Financial Services announced “an impairment of about $275 million after policyholder allocation and before tax as a result of Sigma Finance Corporation’s (Sigma) notice of default.”

Zurich described Sigma as a “limited purpose finance company and has announced on October 1, 2008 that it will cease trading and is expecting the appointment of a receiver as a result of financial-market turmoil.”

Chief Investment Officer Martin Senn commented: “The write-down of our Sigma exposure, while reflecting the severity of the current market disruptions, should be seen in the context of our well-diversified portfolio of Group investments of nearly $200 billion. Given the extraordinary circumstances, we have not only taken a conservative view but are proactively disclosing impairments related to exposures in defaulting companies. We remain confident that our disciplined approach continues to put us in a good position to weather the current financial-market crisis.”

Zurich also said it has some “exposure to other recently defaulting financial services firms,” notably a “write-down on Washington Mutual’s debt instruments” of “approximately $45 million after policyholder allocation and before tax. ”

Zurich has already disclosed around $295 million in exposure to Lehman Brothers.

The bulletin noted that the “total of these write-downs represents approximately 0.3 percent of total Group investments. These amounts form part of the impairment charge to be taken in the nine months results 2008, which are due to be released on November 13, 2008.

Source: Zurich – www.zurich.com