Reinsurance News

Swiss Re exploring possible investment in China Pacific Insurance

6th November 2019 - Author: Matt Sheehan

Swiss Re has confirmed that it is exploring a potential investment opportunity with China Pacific Insurance Company (CPIC), after partnering with the company earlier this year.

Swiss Re logoSources at Bloomberg reported earlier today that CPIC was angling to take a $2 billion stake in Swiss Re, through which it could expand its foreign partnerships.

In turn, Swiss Re could invest between $500 million and $1 billion in a minority stake in CPIC, people familiar with the matter said.

Now, the reinsurer has confirmed that it has been discussing an investment opportunity involving a possible primary offering of CPIC’s securities.

However, it cautioned that no definitive agreement has yet been entered into with CPIC, meaning negotiations could still go on for some time, or even collapse completely.

Stratumn, by SIA Partners

Any securities offering by CPIC remains subject to various contingencies, Swiss Re added, including CPIC’s decision to proceed with any such offering.

Separately, Swiss Re said that it has no current intention of issuing new shares or making treasury shares available to any potential investor.

Swiss Re entered into a cooperation agreement with CPIC back in April 2019 in a push to deepen ties within China, which represents an increasingly important market for the reinsurer.

The company has long highlighted China as the likely source of significant growth in insurance and reinsurance premiums for the firm and has been active there for many years.

Although the specific nature of the partnership was not disclosed, it was assumed that the pair would continue to partner on certain opportunities in the Chinese domestic insurance market.

Swiss Re has previously said that China is the market driving insurance growth for the group of emerging economies, and that it sees huge opportunities in the country and region as a result of the Belt & Road initiative.

The reinsurer is already a minority shareholder in Asian insurer FWD Group, and sources reported last year that the firm had held discussions with Chinese authorities about an investment in Anbang Insurance Group Co.

CPIC – which is listed in both Hong Kong and Shanghai – said in September that it planned to sell global depository receipts and list them on London stock exchange.

It added that a GDR sale would represent no more than 10% of its A-share capital, and that proceeds would be used to replenish capital and fund overseas development.

Bloomberg sources speculated that Swiss Re could invest in CPIC through this GDR program.

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