Global reinsurance giant Swiss Re has been reported to have considered as much as a $2 billion investment from China Pacific Insurance, while also having considered buying into the Chinese insurance giant’s securities.
Bloomberg reported that China Pacific is looking to expand overseas and a stake in Swiss Re is considered one way to achieve that.
Swiss Re is rumoured to have been in two-way investment talks with China Pacific Insurance Company, but has only confirmed one side of these discussions.
In recent years, Swiss Re has been looking to expand its footprint in China and Asia more broadly and had also considered taking on an anchor investor, having previously been in talks about a potential investment deal between itself and Japanese technology conglomerate and investor SoftBank Group.
That SoftBank deal never happened and it’s likely Swiss Re has talked to many others since. We’d be surprised if this is the only case.
Bloomberg said that Swiss Re could take a $2 billion capital injection from China Pacific and at the same time invest $500 million to $1 billion of its own capital into the Chinese insurer in return.
The report said that these discussions were at an advanced stage.
Swiss Re has responded, saying that it “confirms that it has been exploring a potential investment opportunity in a possible primary offering of CPIC’s securities.”
“No definitive agreement has been entered into between Swiss Re and CPIC. Any securities offering by CPIC remains subject to various contingencies, including CPIC’s decision to proceed with any such offering.
“Separately, Swiss Re has no current intention of issuing new shares or making treasury shares available to any potential investor,” the global reinsurance firm explained.
As we understand it, these types of discussions have become more frequent in insurance and reinsurance, as the urgency to deliver shareholder returns and develop global platforms to support continued growth accelerate.
Swiss Re is clearly one of the largest players already, with a burgeoning access to primary risk through its own origination channels.
But adding a deep relationship with a large primary, direct to consumer, player like China Pacific, along with the access to the Chinese market that would provide, could be very attractive for the reinsurance.
For China Pacific, gaining access to global markets and deep capacity through a relationship with Swiss Re would also make a lot of sense.
It will be interesting to see if this potential tie-up goes anywhere.