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Swiss Re Considers Postponing IPO of ReAssure Unit

Swiss Re Considers Postponing IPO of ReAssure Unit

(Bloomberg) -- Swiss Re AG is considering postponing the initial public offering of its U.K. unit ReAssure Group Plc following weak investor demand, people with knowledge of the matter said.

If Swiss Re shelves the deal, it could restart the IPO at a later date or pursue a sale of the business, according to one of the people, who asked not to be identified because the information is private. ReAssure is still taking investor orders, and will proceed with the listing if there’s a surge of late demand, the people said.

Swiss Re shares fell 3.1% to 96.88 Swiss francs at 4:41 p.m. in Zurich, the biggest intraday decline since May. Representatives for ReAssure and Swiss Re declined to comment.

Swiss Re Considers Postponing IPO of ReAssure Unit

ReAssure was offering its shares at 280 pence to 330 pence apiece, implying a market value of as much as 3.3 billion pounds ($4.1 billion). It was slated to take investor orders through July 10 and announce the final offer price on Thursday, according to terms for the deal obtained by Bloomberg.

Postponing the deal would be a blow for Swiss Re shareholders. The potential windfall from the initial public offering is among the considerations for a second tranche of share buybacks that is planned to double the total to 2 billion francs ($2 billion) this year. The third quarter - due to hurricane losses - is also typically key for reinsurers and their capital planning.

ReAssure is a specialized consolidator of closed-book life insurance businesses, which manage existing policies until maturity and aren’t open to new contracts. Companies like ReAssure and rival Phoenix Group Holdings Plc have been buying up portfolios from insurers facing the challenge of managing the policies amid rising costs.

Low Rates

An unprecedented period of ultra-low interest rates across the globe has made profits harder to come by for insurers, who invest their premiums mainly in the bond market.

It’s been a tough market for potential IPO candidates in recent weeks as investors baulked at rising valuations. Addiko Bank, a Vienna-based lender sold shares below its initial price range of EU19-EU23, according to people familiar with the sale. Volkswagen AG’s pulled off the IPO for its trucks unit Traton SE last month though shares fell on its first day of trading.

Credit Suisse Group AG is sole sponsor of the IPO, while Morgan Stanley and UBS Group AG are joint global coordinators. BNP Paribas SA and HSBC Holdings Plc are also working on the deal as joint bookrunners.

--With assistance from Swetha Gopinath.

To contact the reporters on this story: Patrick Winters in Zurich at pwinters3@bloomberg.net;Jan-Henrik Förster in London at jforster20@bloomberg.net;Myriam Balezou in London at mbalezou@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, ;Ben Scent at bscent@bloomberg.net, Amy Thomson

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