ZURICH, Switzerland—Swiss Reinsurance Co.'s heavy losses may have caught some analysts by surprise, but the resignation of the reinsurance giant's chief executive officer did not.

And the challenge for Stefan Lippe, Swiss Re's new CEO, will be a tricky navigation to steer the reinsurer closer to its traditional business model while maintaining its image as an innovative provider of risk-financing solutions, observers say.

Jacques Aigrain tendered his resignation this week after Swiss Re's preliminary announcement that it expects a loss of 1 billion Swiss francs ($876.2 million) for 2008 and said it would raise 3 billion Swiss francs ($2.60 billion) from Warren Buffett's Berkshire Hathaway Inc. to bolster its surplus capital. Swiss Re formally reports its earnings Feb. 19.

Stefan Lippe, the Zurich-based reinsurer's deputy chief executive officer and chief operating officer, was named to succeed Mr. Aigrain.

Analysts say the writing was on the wall for Mr. Aigrain, given the size of Swiss Re's losses.

"It was expected that Mr. Aigrain would step down sooner or later," said Georg Marti, an equity analyst with Zuercher Kantonalbank in Zurich.

"There had been a lot of pressure on his position in recent months," said an analyst who asked not to be named. "From the market's perspective, it was not perceived as a surprise."

"There was speculation, in particular after the preliminary announcement a couple of weeks ago," said Neal Enriquez, an analyst with Oldwick, N.J.-based A.M. Best Co. Inc. "You could hear the rumors everywhere."

Swiss Re clients, investors and brokers now are focused on how Mr. Lippe will attempt to steer the reinsurer out of its financial difficulties. It is going to take time to get Swiss Re back on a profitable track, they say.

"For the time being, it will be very tough for the new CEO to change the business," said Mr. Marti. "The risk exposure is still there and he has to manage it somehow."

Mr. Lippe's appointment "is certainly a positive development in light of the situation at Swiss Re and how the market views the company," said Mr. Enriquez. "He is a 25-year veteran and a homegrown traditional reinsurance underwriter, and I believe that is the direction the company is going to go."

Swiss Re has been looking to revert to a more traditional business model and Mr. Lippe's appointment could accelerate that move, said the analyst who asked not to be named. "The market perspective is that it's a good thing to do. Any defensive posture today is perceived as a good thing."

He pointed out, though, that Swiss Re would be ill-advised to focus entirely on its core reinsurance business at the expense of all other less-traditional operations."As long as they don't completely revert just to keep the markets happy, it will be a positive move," he said.

The company was, for example, seen as a market leader in transforming insurance risk into capital market products. "We viewed that positively," he said, and such initiatives that have positive long-term benefits for the reinsurer probably should not be abandoned.

Mr. Lippe comes with an underwriting background that could enhance his profile among clients, sources note. The new CEO has been with Swiss Re for 25 years, holding positions that included CEO of the reinsurer' s Bavarian Re Group. In 2001, he was appointed head of Swiss Re's worldwide property/casualty business and in 2005 was named to lead property/casualty and life and health underwriting.

A CEO who understands underwriting could be encouraging for the ultimate buyer of insurance, said Marie-Gemma Dequae, president of the Federation of European Risk Management Associations Assns. "If he is more policyholder friendly, that would be important for the risk management community," she said.

A challenge for Mr. Lippe will be to build trust with investors, said Mr. Marti. There has been a lack of transparency at Swiss Re, he said. "Credibility, trust and transparency are all issues the new CEO must address."

Ms. Dequae said risk managers should take an interest in Swiss Re's situation as part of their due diligence in working with insurers. "It is very important for risk managers to be aware of who are the reinsurers of their insurers, which is not always visible or transparent."

A reinsurer's financial stability will impact insurers, and, ultimately, buyers, she pointed out. "It is important not only to look at the ratings of insurers, but also to be informed of the ratings of the reinsurers they use."

A reinsurer's financial stability generally is reflected in the ratings of insurers who use them, Ms. Dequae said. "You could say from a technical point of view that when you look at the ratings of insurers, normally the condition of the reinsurer is included."