While the negotiations between Swiss Re and SoftBank are still ongoing, according to the reinsurance firms CFO John Dacey, there is “no clear indication” that any deal will be struck and the pair are no closer to a deal, but he also wouldn’t be drawn on whether talks with other groups were ongoing.
It was reported earlier this week that Swiss Re’s talks with Japanese tech investor and conglomerate SoftBank had stalled.
Comments this morning from the reinsurance firms CFO, during a call about Swiss Re’s Q1 results which we already discussed here, suggest that to be the case, as he explained that while still talking, the talks have only moved forwards in terms of time spent discussing.
Dacey said, “While we would welcome a large shareholder with a long-term view, we don’t necessarily need one.”
He explained that the rationale between a potential tie-up remains interesting, citing the subsidiaries of SoftBank and their huge client base. He noted that Swiss Re talks to companies like the subsidiaries of SoftBank all the time, as partnerships there can offer huge opportunities to deploy more capacity.
But in terms of where the discussions have got to, progress appears to be limited.
Dacey said, “We continue to be in discussions with SoftBank, over a strategic partnership and potential investment in Swiss Re shares.”
But he explained that while, “Discussions have moved forward, there is still no clear indication they will result in a completed transaction.”
The discussions have moved forward in time, Dacey said, but added that he didn’t want to suggest that the pair are any closer to an agreement or that an inflection point is near.
“We’re still in a discussion stage,” Dacey said, adding that the outcome of those discussions is still open and could go in any direction.
So it does sound like discussions have not progressed, but then this is a complex pairing and there is a lot to consider before any transaction or arrangement could be revealed.
Dacey was asked whether Swiss Re is exclusively talking to SoftBank about an investment on a conference call this morning, to which he said, “We’re not speaking exclusively to SoftBank, in the sense that we talk to many large groups that might have some interesting views on the future of risk and innovation in insurance products, especially covering risks and opportunities that are currently not being covered well by the market.”
He went on to explain, “We’ve referred year after year about the protection gaps, areas of the world that are uninsured and we talk to groups that could help us create solutions to close them.”
When pressed on whether Swiss Re was actively talking to other groups about them taking a major investment stake in the reinsurer Dacey would not be drawn.
“I wouldn’t want to hypothesise on other talks that could be ongoing,” he said.
As we noted the other day though, if SoftBank founder Masayoshi Son cannot gain a stake in the re/insurance market through an arrangement with Swiss Re, the company could look elsewhere.
With other reinsurers like Munich Re also open to taking on an anchor investor at this time, SoftBank does have options.
As our sister site Artemis.bm suggested yesterday, SoftBank could even look at a more radical way to gain entry to re/insurance, in a tie up with a major broker and with the help of the capital markets and ILS-style structures. Perhaps a more efficient entry point for such a company.
It will be interesting to see how this pans out, whether SoftBank stays focused on Swiss Re, or whether the tech investor is already exploring its options in re/insurance more broadly.
