Swiss Re Weighs IPO for UK Closed-Bood Business; Pricing Pressures Hit Earnings

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Pricing pressure in the reinsurance industry weighed on Swiss Re’s first-half earnings, overshadowing a drop in natural-catastrophe claims. The company said it’s exploring an initial public offering for its U.K. closed-book business.

Swiss Re’s net income fell to $1 billion from $1.2 billion a year earlier, missing analyst estimates. An abundance of capital in the industry is weighing on reinsurance prices, while low interest rates are making it harder for companies to earn money from their investments. A change in U.S. accounting rules also curbed Swiss Re’s profit.
Switzerland’s largest reinsurer said it could offer Reassurance shares to the public next year. U.K. he needs external funds to continue to receive closed-life insurance books, which he managed until the end of his term to create cash flows. In October, the Japanese insurance group, MS & AD Insurance Group Companies, agreed to buy 5 percent of ReAssure in an agreement that involved about 3.5 billion sterling ($ 4.6 billion).

“Considering the magnitude of the potential opportunities that are expected to emerge in the middle of the market, it is important that ReAssure has access to significant new capital,” Swiss Re said in a Friday statement.

Swiss Re fell by 2.7 percent in Zurich, with a drop of more than two months. German rival Munich Re is up 3.7 percent, while shares this year fell 3.5 percent this year.

Anchor Investor
The results have been the Swiss Re’s since the company failed to win SoftBank Group Corp. as a shareholder. In May, the Japanese company ended the negotiations, which lasted nearly two months, on how the reinsurance company would invest. Swiss Re said he would continue to welcome the anchor investor.

Stefan Schuermann, an analyst at Vontobel Holding AG, is offset by a 38 percent increase in the first half net income of the Swiss Re’s commodity and casualty loss unit, with negative financial markets and “modest pricing conditions”.

The Swiss company has announced that it is seeing price increases in some real estate and accident lines in its July renewals, focusing mainly on the American continent. The gains in the business lines most affected by the latest natural catastrophes were at the highest level.
According to Munich Re estimates, insured losses from hurricanes, sellers and other natural disasters amounted to about $ 33 billion in the first half. However, in the second half, there are higher losses that will normally determine whether reinsurers in the US will be able to raise capital, just like last year’s hurricanes.

Other important points from the first half results are: Return on investments increased by 2.6 percent compared to the same period of previous year and gross written premiums increased by 8 percent to 19.6 billion dollars. The combined ratio in the property and accident unit dropped to 92.9 percent L & H reinsurance net revenues fell to $ 398 million The combined ratio of enterprise solutions remained above 100%

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