Swiss Re CEO discusses benefits of Softbank deal

Swiss Re CEO Christian Mumenthaler hinted at the benefits of a potential deal that would see Japan’s SoftBank acquiring a stake in the reinsurer during the full-year 2017 results presentation.

Zurich-based reinsurance giant Swiss Re is currently in talks with Japanese conglomerate SoftBank Group regarding a potential minority investment in the reinsurer.

While stressing that there is no certainty that the negotiations will result in a deal, Mumenthaler explained that the logic for it could be found in Swiss Re’s strategy.

“In terms of growth it (the strategy) is about Corso (Corporate Solutions), around Life Capital and high growth markets,” Mumenthaler said. “The essential platform we need to have is in R&D (research and development), the Swiss Re Institute, the data, the knowledge, the combination of data and knowledge, that’s one component for the future. The second one is technology, it’s highly strategic to be strong there and the third one is people and culture,” Mumenthaler explained.

SoftBank could contribute to strengthening of Swiss Re’s capabilities in these areas.

Moody’s had earlier said that Softbank’s communication and technology expertise and network of hi-tech investments would give Swiss Re a competitive advantage as the re/insurance sector adapts to transformational technologies that will over time test its business model.

“Softbank calls itself an ecosystem,” Mumenthaler said. “They are a heavy weight in Asia, in high growth markets generally, India, and they are looking at all tech investments in the world,” Mumenthaler said. “The big ones, all the winners. I’ll leave it at that. If you ask, why would you be open to that (deal), I think I don’t need to say much more.”

But there is more to it. Mumenthaler noted that it would be good for Swiss Re to have an anchor shareholder such as SoftBank.

“Our business is slightly more challenging than others because you have good phases and you have the occasional year with high volatility,” Mumenthaler said. “It doesn’t fit the typical quarterly reporting mentality you see in capital markets. Our time frames are always longer than most of what is there in terms of reporting. We would always see it as attractive to have some strong anchor shareholders,” he explained.

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