Swiss Re Halts Flotation of ReAssure Life Insurance

Swiss Re has postponed the flotation of its UK zombie life insurance business after investors unsettled by overhyped share offers and the prospect of a no-deal Brexit refused to accept the company’s valuation of up to £3.3bn.

Source: The Guardian | Published on July 11, 2019

The Swiss insurer announced the initial public offering of ReAssure in June after months of speculation about a flotation. Shares totalling 26% of the company were due to start trading on Thursday but Swiss Re cancelled the sale, blaming weak demand for UK listings.

Investors are wary of highly valued IPOs after losing money on companies such as Funding Circle and Aston Martin. Those concerns have been compounded by uncertainty over Brexit and the slowing world economy.

John Dacey, Swiss Re’s chief financial officer, said: “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.”

Zombie funds buy up life insurance businesses that are closed to new customers, reducing costs by combining them under one roof. ReAssure, which has £68.7bn of assets under management, would have been one of the biggest IPOs on the London market in what has proved a subdued year for flotations.

ReAssure has been planning its IPO after hiring Mark Hodges, who ran Centrica’s British Gas business, as chief executive in December. The offer would have consisted entirely of shares owned by Swiss Re, reducing the Swiss firm’s holding to less than 50%, from 75%.

Swiss Re and ReAssure’s other owner, Japanese insurer MS&AD, set a price range for the shares of 280p to 330p, valuing the business at between £2.8bn and £3.3bn. Rumours circulated on Wednesday that investors were unwilling to pay the asking price for the shares.

Dacey said Swiss Re still wanted to reduce its stake in ReAssure but that it was in no rush to do so.

As well as allowing Swiss Re to cash in some of its stake, listing on the stock market would have released ReAssure from regulatory constraints imposed by Swiss Re’s ownership and allowed the company to raise fresh funds for expansion.