(Bloomberg) – Swiss Re AG's chief said the reinsurer would welcome an anchor investor after being approached by billionaire Masayoshi Son's SoftBank Group Corp.
In a business where results can change radically from one year to the next, “it's not a bad thing to have an anchor shareholder,” Christian Mumenthaler said at a conference in Zurich. he said. “If you ask me, just high level, is it attractive? I would say yes.”
|Preliminary discussions
SoftBank wants to buy as much as a third of Swiss Re, according to people with knowledge of the matter. While the reinsurer has confirmed what the CEO called “very preliminary” discussions with the investor — Swiss Re hadn't said any more about what it thinks of the offer.
Son is reshaping Japanese mobile-phone carrier SoftBank into a technology investor, a move that could see Son follow business titans including Warren Buffett who have buttressed their conglomerates with healthy cash flows from reinsurance. SoftBank has raised $93 billion out of a planned $100 billion for its Vision Fund, the world's biggest private equity pool, and has taken stakes in businesses including ride-hailing, chipmaking, office-sharing, satellite-building, robot-making and even indoor kale-farming.
Swiss Re on Friday said it plans to raise its dividend and return an additional $1 billion to shareholders. After one of the most expensive years for freak weather events on record almost wiped out profit. Despite record claims last year, competitors including Munich Re, the world's biggest reinsurer, have managed to maintain or increase shareholder payouts.
|Positive outlook
“The outlook for our industry is now more positive than it has been during the last four years,” Mumenthaler said in the statement. ”Changes in the market environment, such as adjusting property and casualty price levels and increases in interest rates, are expected to be beneficial for our business.”
The Zurich-based insurer has hoarded money in recent years when there were relatively few disaster claims, and completed a 1 billion franc share buyback earlier this month.
Swiss Re climbed as much as 2.9% in Zurich trading and was up 2.8 percent at 97.74 francs as of 9:33 a.m. That made it the best performer in the benchmark Swiss Market Index. The stock has climbed 6.5% in the last 12 months.
Reinsurers have raised their expectations that high claims may put an end to years of falling prices. The combined ratio at Swiss Re's property and casualty reinsurance unit, the largest division, increased to 111.5%, as the year's weather events produced above average claims. A ratio above 100% means more money is paid out in claims than received from premiums.
|Losses highest since records started in 1970
Global insured losses resulting from natural and man-made disasters in 2017 are expected to be around $136 billion, according to data collected by Swiss Re. That's the third highest since it began collecting records in 1970. That was mostly due to the three hurricanes — Harvey, Irma and Maria — that hit the US and the Caribbean, and wildfires in California.
Other highlights from Swiss Re's full year results:
- Gross premiums for the group were $34.8 billion vs $35.6 billion a year earlier.
- Group net income fell to $331 million from $3.6 billion a year earlier.
- Dividend of 5 francs proposed for 2017 earnings.
- The company's Property & Casualty unit lost $3.7 billion from large natural catastrophes including storms Harvey, Irma and Maria, Mexican earthquakes and California wildfires.
- Corporate Solutions reported a loss of $741 million vs a profit of $135 million a year earlier.
- Life & Health Reinsurance reported a profit of $1.1 billion vs $807 million a year earlier.
Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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