Reinsurance News

Softbank’s interest in Swiss Re deal reported to be waning

7th May 2018 - Author: Steve Evans

According to media reports this weekend, Japanese technology & telecoms investor & conglomerate SoftBank’s interest in securing a deal with global reinsurer Swiss Re is waning, as talks drag on.

Swiss Re SoftBank

As we reported last week, it’s been said that Swiss Re’s talks with SoftBank had stalled, which led the CFO of the reinsurance firm to say that there is “no clear indication” that any deal will be struck and the pair are no closer to reaching agreement.

But, according to a report from the Financial Times, the talks may be more than stalled and it could be that SoftBank is actually beginning to lose interest in the deal, especially as the terms appear to be moving away from the significant stake in Swiss Re that the tech investor had reportedly first been looking for.

At first it had been reported that SoftBank was looking to secure around a 25% share of Swiss Re’, but the reinsurer later said that it did not expect any agreement to involve more than a 10% stake in its share capital.

This is said to have become a sticking point, as SoftBank founder Masayoshi Son was hoping for a larger stake in the firm, as well as more control. Also said to have contributed to the slowdown in negotiations is the fact the share price of Swiss Re has risen since news of the discussions first emerged.

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Stalled or otherwise, now it’s being reported that SoftBank’s interest in the deal has declined.

The FT said, “Talks between Swiss Re and SoftBank over an investment in the reinsurance company are close to collapsing after three months of discussions.

“People close to the situation say the Japanese company’s enthusiasm has waned in recent weeks.”

We understand that the discussions have brought about some differences of opinion at high-levels within Swiss Re, with some executives said to be more enamoured with a potential tie-up with SoftBank than others.

When such potentially transformational transactions are on the table there is always likely to be some disagreement though, so this is unsurprising. But for SoftBank’s Son, which is perhaps more used to the fast-paced decision-making of the technology and start-ups world, negotiating with the reinsurer may have moved too slowly.

The potential benefits of the tie-up remain clear though and there remains every chance something could come out of the discussions.

Even if not an investment, there would be clear benefits for SoftBank to have a business relationship with Swiss Re, in having access to a platform where it can explore insurtech innovation, while the reinsurer can greatly benefit from the tech giants distribution reach.

Whether the discussions can result in an investment remains to be seen, but perhaps they can result in a profitable ongoing business relationship if nothing else.

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