Fitch Ratings has said that its ratings for ReAssure have not been affected by Swiss Re’s decision to suspend the initial public offering (IPO) of its shares.
Swiss Re chose to shelve the IPO of its UK closed life book consolidator business last week in response to adverse market conditions, such as “heightened caution and weaker underlying demand in the UK primary market from large institutional investors.”
The offering had been planned to go ahead this month, with ReAssure valued at between £2.8 billion and £3.3 billion.
However, Swiss Re made clear that it still eventually plans to deconsolidate its ownership in ReAssure via a share offering.
This would shift ReAssure’s regulatory regime to Solvency II from Swiss Solvency, which Fitch believes would allow investment and capital management decision to be made independently of Swiss Re.
It therefore sees no change to Swiss Re’s overall strategic plan for ReAssure, which includes retaining a substantial, albeit reduced, stake.
Swiss Re confirmed in June that the long-awaited ReAssure IPO would go ahead some time this month, having originally indicated as early as August 2018 that it was considering such a transaction.
An IPO of ReAssure’s shares had been expected to provide a route to bring fresh capital into the business, providing working capital to put into new transactions and grow the UK life insurance book under the brand.
Fitch explained that its assessment of ReAssure’s rating reflects the insurers’ strong business profile and profitability, as well as it very strong capital position.
It believes that the company’s track record of successfully completed acquisitions and its proven capability of value creation from closed-book transactions put it in a strong position to take advantage of future growth opportunities.
Additionally, Fitch acknowledged that ReAssure has taken steps to strengthen its management team in anticipation of the IPO.
ReAssure is focused exclusively on the acquisition and management of closed books of life insurance policies, seeking to consolidate multiple books into one portfolio and generate efficiencies through better management and by leveraging the strength of Swiss Re’s overall group-wide capacity.
