Swiss Re is keen to find ways to profit from weaknesses in the global insurance and reinsurance market, with acquisitions a possible route, although pricing remains unattractive, according to CEO Christian Mumenthaler.
The Swiss Re chief said in an interview with the Financial Times that his firm would be keen to take advantage of any weaknesses it finds in order to make acquisitions.
These could include acquisitions on the reinsurance side of its business, where he said, “it will be a consolidation play because size matters and you could have huge synergies in that field.”
But Swiss Re is also keen to make acquisitions in the primary insurance market as well, with its Corporate Solutions arm an area ripe for growth through acquisitions.
But price is an issue for Swiss Re and its CEO, as it seems the reinsurer believes most firms are over-valued currently.
“Why we don’t do it is because everything I’ve seen so far . . . I couldn’t explain to shareholders,” Mumenthaler told the FT.
“That’s the killer criteria — can I go in front of shareholders at the price that people want and say ‘this makes sense’?” he continued.
He said there is little chance of major M&A in the near term due to this price disconnect, seemingly between the valuations of re/insurers shares, which Mumenthaler doesn’t believe will fall anytime soon, and the perceived value Swiss Re has of their businesses.
Mumenthaler also said that any downsizing of the amount of alternative reinsurance capital in the market would benefit his firm, and he repeated his opinion that some of the alternative capital in reinsurance is not as aware of the risks it bears as others.
After the major losses of the last year and a half it is possible some firms find themselves stressed and become a more attractive acquisition proposition.
But, whether the reinsurance giant can find any acquisitions that it views as attractive from a price point and additive to its business remains to be seen, but Swiss Re is likely always on watch in case opportunities for synergistic growth emerge.
