Why Financials Are Still Very Dangerous

From Bloomberg:

Swiss Reinsurance Co., the world's biggest reinsurer, had a 1.2 billion-Swiss franc ($1.07 billion) loss on derivatives in October after the U.S. subprime mortgage crash roiled debt markets.

.....

``We clearly made some poor choices,'' Roger Ferguson, the former U.S. Federal Reserve governor who runs Swiss Re's financial services division, told analysts on a conference call. Swiss Re's loss came less than two weeks after the company reported third-quarter profit that surpassed analysts' estimates.

``This is a surprise, particularly given their so recent reporting,'' said Richard Hewitt, an analyst at Dresdner Kleinwort who rates Swiss Re ``buy.''

Two weeks ago, everything was fine. The company reported no problems. Now -- two weeks later -- we have a mea culpa regarding a writedown. There is no way that Swiss Re didn't know about this two weeks ago; this is not the kind of loss that just "appears". They had to know about it and refused to disclose it.