Swiss Res Deputy CEO: GE Deal Good For Many Reasons

Following Swiss Re’s announcement of its $6.8 billion planned acquisition of GE Insurance Solutions from General Electric Company, Swiss Re’s deputy CEO, Jacques Aigrain, said there were several reasons why the Zurich-based reinsurer is adding the GE operations to its existing business mix.

Aigrain is set to become CEO on Jan. 1, 2006, succeeding John Coomber.

One of the attractions of the deal, Aigrain said, is GE Insurance Solutions’ broad regional client base, which has “very little overlap” with Swiss Re’s existing global clientele.

GE’s continental European property-casualty portfolio will add new products and a client portfolio, according to Swiss Re.

In addition, Aigrain said, GE Insurance Solutions’ European life and health business strongly reinforces Swiss Re’s existing business on continental Europe and offers additional access to the market in the United Kingdom.

Upon completion of the deal, Swiss Re will add operations in Germany as well as the U.K. critical care market. Swiss Re will also gain a presence in the Asian market with the addition of over 100 GE Insurance Solutions professionals.

The transaction, expected to close in mid-2006, will result in efficiencies that will generate cost savings of $300 million, Aigrain said. The transaction will be accretive to earnings in 2007, the first full year after closing, he added.

The transaction does not include GE Insurance Solutions’ U.S. life & health business. One reason for the exclusion, Aigrain explained, is that Swiss Re could not come to terms with the seller on a price.

In addition, he continued, that business consists largely of disability and long term care business, lines that are difficult to evaluate. For any business Swiss Re operates in, Aigrain said, there is a need to “understand exactly the mechanics.”

As part of the transaction, GE has agreed that GE Insurance Solutions will establish approximately $3.4 billion pretax additional reserves.