swiss-re-copy-1
Swiss Re
2 December 2016 Insurance

Swiss Re seeks M&A to boost footprint of its primary business

Swiss Re is looking for acquisitions to enhance capabilities of its corporate solutions unit as well as to secure growth opportunities in developing markets.

Swiss Re’s Corporate Solutions unit which offers products ranging from standard risk transfer covers and multi-line programmes to highly customised solutions tailored to the needs of mid-sized and large multinational corporations, has already executed several bolt-on acquisitions over the last couple of years, most recently in the US, but also in China, Colombia and Brazil, CFO David Cole said during a Dec. 2 investors’ day briefing.

On Jan. 5, 2016, Swiss Re Corporate Solutions has, for example, signed an agreement with Independence Holding Company to acquire IHC Risk Solutions and its direct employer stop loss (ESL) business, for an aggregate of $152.5 million. The arrangement broadens Swiss Re’s Corporate Solutions’ ESL capabilities in the small- and middle-market self-funded healthcare benefits segment, according to the company. The transaction also enhances the company's underwriting and claims management capabilities, while strengthening its product distribution.

“More such transactions remain a distinct possibility as we invest in expanding our footprint and extend our capabilities in the primary lead side,” Cole said.

Corporate Solutions has a core role in Swiss Re’s strategy as the tailored transactions it conducts are generally more profitable than the regular product offering.

“We’ve been very successful over the last several years with a number of large life & health transactions in both Asia as well as the US,” Cole noted.

Swiss Re is also looking into investments in primary insurers to secure business in high growth markets.

“Not all of these markets have well established reinsurance markets,” Cole explained. “In order for us to get access to the underlying risk pools, for example the primary risk pool in China or the health insurance risk pool in Brazil, we utilize strategic capabilities to invest in local, regional primary companies in order to give us access to those chains, and we’ll continue to do so,” he noted.

Swiss Re has, for example, invested $493 million for a 4.9% stake in New China Life Insurance Company in 2013 in what the company said was reaffirming Swiss Re's commitment to high growth markets. New China Life provides life and health insurance products.

Swiss Re’s gross earned premiums from high growth markets grew 17 percent between 2010 and 2015 to around $5 billion, according to a presentation. Growth is being achieved despite adverse foreign exchange development and while maintaining disciplined underwriting, according to the company.

In the first nine months of 2016, 47 percent of gross earned premiums in high growth markets came from Asia, 21 percent from motor China, 20 percent from Europe, Middle East & Africa and 12 percent from Americas.

In total, around 26 percent of Swiss Re’s premiums are now coming from high growth markets, Cole said. “If you look ahead, although we will continue to grow in the developed markets, in the US and Western Europe, we see that a significant portion of growth in the world will continue to come from the high growth markets. Our anticipation is that the overall percentage coming from those markets will indeed increase,” he noted.

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk