S&P warns on Swiss Re ReAssure ratings as parent ponders IPO

S&P Global Ratings has placed the 'A-' ratings of Swiss Re ReAssure (SRRAL) on Credit Watch Negative, following the announcement by its parent Swiss Re Group that it is exploring the possibility of an  initial public offering (IPO) of the UK closed-book consolidator ReAssure (not rated).

ReAssure is one of the main operating entities of the Swiss Re Life Capital (SRLC) business unit, which S&P said it considers to be highly strategic to the Swiss Re Group.

“We understand that, following any potential IPO, the remaining business will comprise ElipsLife and IptiQ (which are both relatively small primary life insurers) and Swiss Re's share in SRRAL. Following Friday's announcement, we expect to review the group status of the SRLC. At this stage, we believe it is unlikely that we will continue to view the business unit as highly strategic following our review,” S&P said in a statement.

SRRAL is an intermediate nonoperating holding company in the SRLC business unit. S&P said the rating of SRRAL is dependent on its assessment of the business unit's group status. “We therefore placed the ratings on SRRL on CreditWatch negative,” it said.

It also placed the ratings on the €750 million 1.375% senior debt instrument due in 2023 issued by SRRAL on CreditWatch developing.

The rating agency added: “The negative CreditWatch on SRRAL reflects our view that the SRLC business unit, of which SRRAL is a part, is unlikely to remain highly strategic to the Swiss Re Group following the IPO of the ReAssure business. If we view the business unit as strategically important, and if we view its stand-alone credit profile (SACP) as 'bbb+' or higher, then we would affirm the ratings on SRRAL at 'A-'. However, if the group status is less than strategically important, or if the SACP is 'bbb' or lower, then we could lower the rating on SRRAL by one or more notches.”

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