Swiss Re, the world’s second-largest reinsurer, achieved a lower-than-expected profit in the first half of the year. The company mulls an initial public offering for its Reassure business.
Reassure, the U.K.-based closed book business of Swiss Re, needs access to substantial new capital to acquire additional closed books, the Swiss owners said in a statement on Friday. The company aims to pursue opportunities arising in the market.
«Under Swiss Re’s Swiss solvency test capital regime, Reassure’s asset-intensive business is subject to significant asset risk charges,» Swiss Re said. «The closed book consolidation market remains an attractive growth area for Swiss Re, which is expected to remain a significant investor in Reassure.»
A potential IPO of Reassure would take place at some point in 2019. The company promised more details should it decide to pursue with the option.
U.S. Accounting Changes
Swiss Re, one of Switzerland’s blue-chip financial firms, missed expectations for the first half. Net income declined to $1 billion in the first six months, down from $1.2 billion a year ago. The company would have achieved a result in line with last year’s, but new U.S. GAAP accounting guidance negatively impacted the result, Swiss Re said.
The accounting change had an estimated negative impact on pretax earnings of $265 million for the first half.
Lower Catastrophe Claims
Gross premiums rose 8 percent to $19.6 billion, mainly due to premium growth across the company’s life and health businesses. Analysts had predicted a premium volume of $20.3 billion.
Swiss Re didn’t have to contain with much in terms of major claims from natural catastrophes in the first half, boosting net income at property and casualty by 38 percent to $752 million.
