Analysts at Deutsche Bank believe that, while Swiss Re’s planned initial public offering (IPO) of its UK closed book business ReAssure is still on track for 2019, market volatility arising from Brexit remains an ongoing risk.
The global reinsurance giant’s Board of Directors proposed plans last month to introduce a new public share buy-back program consisting of two tranches of each up to CHF1 billion (US$995,000), effectively doubling the amount it would return to shareholders.
The proposal, due to be put forward at Swiss Re’s upcoming Annual General Meeting of shareholders (AGM) on April 17, is dependant on the successful reduction of the company’s holding in ReAssure to below 50%.
Swiss Re had previously stated intentions to reduce its stake in ReAssure in order to reduce its exposure to UK credit risk, which consumes a disproportionate level of capital under Swiss Solvency Test (SST) regulations.
After the MS&AD stake acquisition (increased stake in ReAssure to 25% from 15%), Swiss Re has brought its stake down to 75%, which means that it is already halfway through to its minimum target of reducing the stake to below 50%.
