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Swiss Re says SoftBank stake in insurer unlikely to exceed 10%

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Billionaire Masayoshi Son's SoftBank Group is likely to take a stake of 10 per cent or less in Swiss Re as it seeks to gain a foothold in the cash-rich reinsurance industry.

[ZURICH] Billionaire Masayoshi Son's SoftBank Group is likely to take a stake of 10 per cent or less in Swiss Re as it seeks to gain a foothold in the cash-rich reinsurance industry.

A deal would see Japan's third-richest man follow other other business titans such as Warren Buffett in seeking to profit from the cash flows provided by reinsurance. Mr Son is reshaping Japanese mobile-phone carrier SoftBank into a technology investor through its Vision Fund and sees areas of potential cooperation with Swiss Re.

Swiss Re confirmed in February that it had been approached by the Japanese company regarding a minority stake after earlier reports that SoftBank was in talks to buy as much of a third of the insurer. Softbank may value the Zurich-based firm at as much as 37 billion Swiss francs (S$50.6 billion), Bloomberg News reported last month.

Negotiations about a SoftBank investment are ongoing and remain at an early stage, Swiss Re said in a statement on Wednesday.

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Reinsurance companies generate cash flows from the premiums they collect. Working together with Softbank, Swiss Re could leverage the Japanese conglomerate's technology and access to high-growth Asian markets to fuel growth, Stefan Schuermann, an analyst at Bank Vontobel said in a note to clients in February.

"With SoftBank as an anchor shareholder, the reinsurer would gain a back-up investor offering protection of its balance sheet in nasty years," he wrote.

The traditional reinsurance model has come under pressure in recent years as hedge funds piled into the industry. In addition, competition is rising from the likes of more recent emerging market rivals such as India's GIC Re and Qatar Re.

Swiss Re chief executive officer Christian Mumenthaler said in February that he would welcome an anchor investor in a business where results can change radically from one year to the next.

"It's not a bad thing," he said at a conference in Zurich in February. "If you ask me, just high level, is it attractive? I would say yes."

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