Swiss Re writes reinsurance for both property/casualty and life and health insurers. It will also write property/casualty reinsurance for corporate and public sector clients that are self-insured and help them manage their risk. For insurers looking to unload old books of life insurance, the company's Admin Re group will buy up closed books and maintain the policies. It also stays busy working to make the most of the assets generated by its other businesses. While Swiss Re is active around the globe, its activities in the Americas account for some 40% of the company's revenues. Operating from offices in more than 20 countries, Swiss Re sells its products globally through both direct sales and distributors.
The company's Asset Management operations only account for 4% of its total revenues, but contribute 75% towards its operating income. While its revenues have bobbed across recent years, its net income has rebounded from the queasy drop it experienced in 2008.
Swiss Re became a big cheese in the reinsurance industry through a steady stream of purchases large and small. However, it responded to the earliest days of the global financial crisis by divesting non-core businesses, and conducting a stringent de-risking of its asset management businesses. In a fit of introspection, the company simplified its legal structure and consolidated some of its scattered units into tidy bins. In 2011 the company established a new holding structure so that what had been Swiss Reinsurance Company became Swiss Re AG.
Despite the chilly economic winds blowing through Europe and expensive catastrophes in Japan, New Zealand, and Australia, in 2011 the company returned to its acquisitive habits, buying up an asset management business in Brazil. Swiss Re continues to seek geographic expansion in emerging markets such as Asia and Latin America.
"Closed books" are blocks of life insurance policies that are no longer being sold, but remain in force, with premiums still being paid in and claims still being paid out. While there is little apparent glamour in tending closed books, Admin Re was set up in 2011 to specialize in doing just that. The upside to buying existing books is that they simply require maintenance with none of the marketing or distribution expense. Some insurers opt to keep their books, but outsource the administration of the policies to Admin Re. As regulations change, many European insurers and banks are choosing to offload their closed books to free up capital. Admin Re operates in the UK through ReAssure, which has plumped up from the acquisition of books from Barclays and MetLife.
The company sold the majority of the US closed book life insurance operations of its Admin Re subsidiary to Jackson National Life Insurance (a subsidiary of Prudential plc) for some $663 million in 2012. The operations were held by Admin Re's SRLC America Holding subsidiary (the parent of Reassure America Life Insurance). Swiss Re made the divestiture to monetize some of the value of the Admin Re operations to help meet its financial targets, as well as to narrow the focus of the Admin Re businesses on the UK and Continental European markets. – less