Swiss Re turns to technology, life business for investments
Swiss Re CEO Christian Mumenthaler has explained how the reinsurer is looking to invest in technology while it is, at the same time, likely to make acquisitions in life insurance businesses.
Swiss Re has devised a new strategy for its technology investments based on four elements, Mumenthaler explained at an April 4 pre-investor day press conference.
“We will invest in technology where we can help our clients to be more competitive,” he said. An example for such investments is the Magnum tool, an automated underwriting solution, which is also available to operate on mobile devices, according to an April 4 presentation. Automated underwriting creates value for insurers as it drives scalability, the presentation explains.
A second element of the technology investment strategy aims to improve Swiss Re’s own value chain. “This is more about cost savings or minimising risks,” Mumenthaler explained. As Swiss Re digitises the business, contracts can be more easily searched, benefitting risk management and capital management processes, he noted.
Furthermore, Swiss Re is investing in technology to get closer to the risks it is underwriting, Mumenthaler explained. An example for this is iptiQ, the firm’s life & health white label digital B2B2C platform. It enables distribution partners to go to market with Swiss Re products and their own brand at the same time. The platform supports the process from product creation to policy administration and claims.
Finally, the fourth element is around data. Swiss Re wants to become a “truly data-driven knowledge organisation,” according to the presentation. Gathering internal and external data, Swiss Re develops analytical and machine learning capabilities to leverage the data and make it available to its own workforce.
“Everybody will in future be able to buy data, but it won’t lead to a competitive advantage because everyone else can buy it, too,” Mumenthaler explained. “Technology will become a commodity because everybody will have access to artificial intelligence (AI) and quantum computing. The real competitive advantage will come from your own data, which others don’t have. This is an internal project to make data available for large groups of people through the use of technology,” he said.
On the M&A front, Swiss Re sees most potential on the life capital side of the business, Mumenthaler said. “The closed book business is all about finding new blocks of business and the UK probably offers some opportunities in the next few years,” he noted.
In the open book business opportunities are less pronounced, perhaps because older books of business is underpinned with legacy technology which may cause compatibility issues, Mumenthaler explained. “I wouldn’t exclude it, we are interested, but it’s not that easy,” he said.
In Corporate Solutions, Swiss Re would also like to acquire more business, but opportunities are scarce, Mumenthaler suggested. “We have done quite a few smaller, bolt-on M&A, so that certainly will continue,” he said. “If there is any way we can make a leap forward in terms of capabilities, we would do it, but prices in the current environment look extremely expensive. I am not particularly optimistic for any move in that sense at this stage,” he said.
The only area Mumenthaler excludes acquisitions at the moment is the reinsurance business.
“In reinsurance it’s hard to see anything that makes sense,” Mumenthaler said.
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