Reinsurance giant Swiss Re, while carefully assessing a potentially transformational investment from tech giant SoftBank, is also open to mergers and acquisitions, but CEO Christian Mumenthaler explained that M&A deals have to add value.
Speaking about the reinsurance firm’s annual results last week, Mumenthaler said that any M&A deals it enters into have to be worthwhile, take into account the company’s dominance in certain areas and bring something that can add incremental value to the overall group.
Answering a question on where Swiss Re could look at M&A, Mumenthaler said that reinsurance was not one of them, “Our philosophy’s unchanged. We have the capital, so reinsurance is an unlikely area as we’re already the biggest player and it’s hard to see what value it would add.”
What that means for the rumours of a potential Swiss Re bid for XL Group is uncertain, but it’s true that the Swiss reinsurer has no real need for greater reach in reinsurance alone, so any deal there would need to see the reinsurer certain that XL’s other businesses were going to add value.
Discussing the potential for specific M&A in different business units of Swiss Re, Mumenthaler said, “In Corporate Solutions, if there’s something larger that will help CorSo grow we’d certainly look at it.”
“In the Life Capital sector, absolutely possible. Smaller ones in Group Life if we find them. And in Reassure, now we have a partner, it’s absolutely possible.,” he continued.
“We’re not just going to do M&A for no reason, it has to add value,” Mumenthaler stated.
Swiss Re is in a position alongside only a few reinsurers, that scale is not the answer anymore rather it would be synergies, new business opportunities, and efficiencies, that would likely drive any M&A decisions.
The potential investment from SoftBank could answer all three of those, without any overlap and so offer significant value to the reinsurer.
But even there, Mumenthaler was keen to insist that Swiss Re feels secure on its own and not in need of a new partner.
When asked whether the firm needs a partner like SoftBank, Mumenthaler responded, “I don’t think so. Our strategy cannot be dependent on any particular partner.”
Also read: Swiss Re says “no certainty” SoftBank deal will be consummated.
