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Swiss Re puts off $4 billion ReAssure IPO on weak demand

Posted On: Jul. 11, 2019 7:41 AM CST

Swiss Re

(Reuters) — Reinsurance group Swiss Re Ltd. suspended plans for a $4.1 billion initial public offering of British life insurer ReAssure on the day it was set to start trading in London, citing weak demand from institutional investors.

The cancellation comes as global share listings hit their lowest level in three years in the first six months, with a prolonged slowdown in Europe. Listings that went ahead were cut in volume and priced at the low end of forecasts.

Still, at least one analyst questioned if the move was prompted by more than market conditions.

“Our judgment is that the market environment is at least as good as it has been for at least the past year,” analysts at Keefe, Bruyette & Woods Inc. said in a report. “We are not sure if there is some alternative explanation behind the scenes.”

Reuters reported on Wednesday that Swiss Re was considering postponing or restructuring the London listing due to limited investor appetite.

Shares, which had closed 2.5% lower on Wednesday, were down a further 1.2% by 0730 GMT.

A Swiss Re spokeswoman said the Zurich-based group was not considering restarting the IPO process for ReAssure this year but that long-term options remained open.

Chief Financial Officer John Dacey said the group still intended to reduce its ownership in ReAssure.

“There has been no pressing need for Swiss Re to divest shares at a price that we consider to be unrepresentative of ReAssure’s value and future prospects,” he said.

Under the flotation plans, Swiss Re would have cut its stake in ReAssure to below 50% from 75% now. Japan’s MS&AD Insurance Group Holdings intended to keep its holding at 25%.

Swiss Re had set a price range of £2.80 to £3.30 per share for ReAssure, Britain’s sixth-largest life insurer, valuing it at up to £3.3 billion ($4.14 billion).

Swiss Re wanted to spin off ReAssure to put the business under a more favorable regulatory regime and give it easier access to capital to fund its expansion.