John Coomber, 47, a Briton who heads Swiss Re's life operations, says it is mere coincidence that Swiss Re has bought back a company which it sold because it did not see eye to eye with the other shareholders.
M&G Re is a "completely different company from the one we sold", he says. It has cleaned up its property and casualty business, which was the source of all its problems, and now has an attractive position as one of the leading providers of life and health reinsurance.
Coomber also denies that Swiss Re was rushed into spending the bulk of the SFr 5.5 billion ($4.6 billion) it raised from last year's sale of its direct insurance operations by the rapid pace with which rivals were snapping up smaller competitors. "We may have finished last, but we were not the last to start," says Coomber, commenting on the busiest period for take-overs in the history of the reinsurance industry.
Swiss Re, which depends heavily on reinsuring property and casualty risks, had been keen to expand in the more stable area of life and health reinsurance.
Already number two after Munich Re, the acquisition of M&G Re will make it the market leader. It will have combined premiums of SFr4.1 billion, and the proportion of its business in life and health rises from 17 per cent to 27 per cent.
The deal also strengthens Swiss Re's position in the US reinsurance market, where it was in danger of falling behind after the recent spate of mergers.
It will have annual US premiums of $3.3 billion a year and, although it still ranks behind Employers Re ($3.8 billion in the US), and General Re/ National Re ($3.6 billion), it will be considerably bigger than its old rival, Munich Re, which is taking over American Re. Swiss Re will also be the market leader in medical expense reinsurance.
Although Swiss Re is paying a handsome premium to book value, it believes that by putting the two businesses together it can save money in areas such as investment management, and the need for extra reinsurance will be reduced.
While it is reluctant to put a figure on the potential synergies, some analysts suggest the benefit could be as much as 500 million pounds ($778.5 million).
