Swiss Re considers 2019 ReAssure IPO as profit fall hits shares
(Reuters) — Swiss Re Ltd. is exploring a 2019 listing in Britain of its U.K. closed book business ReAssure, it said on Friday, as a 17% fall in first half net profit hit its shares.
Shares in Swiss Re were trading down 2.6% at 0751 GMT after it said net profit was $1.0 billion during the first six months, down from $1.2 billion a year earlier and below market forecasts.
However, Swiss Re said that profit would have been flat if it weren’t for the changes in U.S. GAAP that affect the measurement of equity investments.
Eight analysts polled by Reuters had expected on average net profit of $1.13 billion.
Swiss Re and the insurance industry are bouncing back from a series of major hurricanes, fires and earthquakes in North America in 2017, the costliest year ever for the industry.
“It is positive to see that the market environment is gradually recovering,” Swiss Re Chief Executive Christian Mumenthaler said.
Swiss Re and its competitors have been under pressure in recent years from falling prices amid intense competition.
Earlier this year, Swiss Re was in talks with SoftBank about the Japanese group potentially taking a stake in the reinsurer, but these fizzled out.
The reinsurer said that it was important for ReAssure to have access to new capital to acquire additional closed books.
Such deals have been heating up as insurers struggle to pay guaranteed returns for life insurance policies due to record-low interest rates and more stringent European capital rules.
ReAssure has about £45 billion ($58.56 billion) in assets under management and 3.3 million policies, and analysts say it could achieve a market capitalization of about $3 billion, or roughly half its book value, which was $6.2 billion in 2017.
Swiss Re said that it expected to remain a significant investor in the U.K. unit even after a possible IPO but that it would likely no longer hold a majority stake.
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