Swiss Re has announced the suspension of its plans for an initial public offering (IPO) of shares in its UK closed life book consolidator business, ReAssure, which was set to go ahead this month.
The reinsurer explained that the suspension was in response to adverse market conditions, such as “heightened caution and weaker underlying demand in the UK primary market from large institutional investors.”
Swiss Re was clear that it still eventually plans to go ahead with a ReAssure IPO, but said there was no “pressing need” to pursue such a deal at an unattractive price.
The IPO had been priced at a range of £2.80 to £3.30 per share, implying a market capitalisation for ReAssure of between £2.8 billion and £3.3 billion.
“While we firmly believe that the long-term interests of ReAssure are best served by a more diversified shareholder base, there has been no pressing need for Swiss Re to divest shares at a price that we consider to be unrepresentative of ReAssure’s value and future prospects,” said John Dacey, Group Chief Financial Officer at Swiss Re.
“We retain our objective to reduce Swiss Re’s ownership in order to de-consolidate ReAssure,” he continued. “In the meantime, Swiss Re and MS&AD remain fully committed and supportive of ReAssure and its management team, and will participate in future acquisitions in line with their respective shareholdings.”
Swiss Re confirmed in June that the long-awaited ReAssure IPO would go ahead some time this month, having originally indicated as early as August 2018 that it was considering such a transaction.
ReAssure is focused exclusively on the acquisition and management of closed books of life insurance policies, seeking to consolidate multiple books into one portfolio and generate efficiencies through better management and by leveraging the strength of Swiss Re’s overall group-wide capacity.
An IPO of ReAssure’s shares had been expected to provide a route to bring fresh capital into the business, providing working capital to put into new transactions and grow the UK life insurance book under the brand.