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The insurance market is keeping a close eye on Swiss Reinsurance Co. as it assumes the role of the world's largest reinsurer with its acquisition of GE Insurance Solutions.
The deal has left market experts and observers wondering whether Swiss Re's clients that also had coverage with GEIS before its acquisition are comfortable with less risk diversification. They also want to know whether Swiss Re will offer the full property catastrophe capacity of both reinsurers or reduce the amount of that coverage. They worry, too, that the already tight retrocessional market will be pinched even further as the Swiss reinsurer cuts back on the amount of that coverage it will accept.
Swiss Re was the world's second-largest reinsurer, based on 2005 net premiums of $22.4 billion, before its $8.8 billion acquisition of the property/casualty business of GEIS, the insurance and reinsurance subsidiary of General Electric Co. The acquisition, which was completed in June, included GEIS' fifth-ranked Employers Reinsurance Corp., which wrote net premiums of $6.7 billion last year.
The size of the combined entity moved Swiss Re ahead of Munich Re Group, which wrote $23.8 billion in premiums in 2005, according to Business Insurance's reinsurer ranking.
As part of the acquisition, which rose from the $6.8 billion announced in November 2005 to reflect an adjusted purchase price and a $1.2 billion cash infusion, Swiss Re also purchased GEIS units GE Frankona Reinsurance Ltd. (UK), GE Frankona Ruckversicherungs-Aktiengesellschaft, GE Reinsurance Corp., Westport Insurance Corp., First Specialty Insurance Corp. and Industrial Risk Insurers.
Swiss Re did not acquire any of GEIS' U.S. life and health business.
Swiss Re's clients and brokers will be interested in how the Zurich-based reinsurer operates as it brings GEIS into its fold. Analysts and regulators are also watching as the 143-year-old reinsurer absorbs a former competitor and expands its global presence.
The Swiss reinsurance group is waiting until the Rendez-Vous de Septembre 2006 international reinsurer meeting later this month in Monte Carlo, Monaco, to publicly discuss how it will handle some aspects of the GEIS integration,...