S&P says Swiss Re ReAssure ratings to remain negative following IPO suspension

S&P Global Ratings has said that its 'A-' ratings on Swiss Re ReAssure (SRRAL) will remain on Credit Watch with negative implications following the suspension of its initial public offering (IPO) on July 11.

The Zurich-based reinsurer pulled the £3.3 billion flotation of ReAssure, its UK closed life book business, on the day it was set to start trading on the London Stock Exchange, citing weak investor demand in the UK primary market.

S&P had originally placed these ratings on Credit Watch in August 2018, following the IPO announcement by its parent Swiss Re Group. “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," it said.

Swiss Re has announced that it still intends to reduce its ownership in ReAssure to de-consolidate this UK closed life consolidator.

S&P stated that its plan to resolve the Credit Watch on both SRRAL and its senior debt once it has formed a view of SRLC's stand-alone creditworthiness and its relative importance to the group, taking into account Swiss Re's commitment to reduce its ownership of ReAssure.

"Our rating on the senior debt instrument remains on CreditWatch developing because when Swiss Re reduces its stake in ReAssure, Swiss Re Ltd. could guarantee the notes. We would then equalize the debt rating on the notes with the 'A' rating on Swiss Re Ltd," the agency said. "However, if the guarantee is not put in place or does not meet our criteria, then we could lower or affirm the rating on the bond, keeping it in line with the rating on SRRAL."

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