Swiss Re plans to withdraw from its iptiQ business following a “strategic review” of the digital white-label insurance platform, driven by weaker demand and a lower tech threat than initially anticipated. The decision comes as the reinsurance giant reports a significant profit increase from core business, nearly doubling to $1.1 billion. Swiss Re may seek buyers for some parts of iptiQ, while earlier-stage entities might be run off.
“Given these changed conditions and Swiss Re’s strategic priorities, we’ve concluded we are not the best owners of this business going forward,” Swiss Re group chief executive officer Christian Mumenthaler stated, highlighting the shifting market environment since iptiQ’s inception in 2014.
iptiQ was created as a digital B2B2C insurance company with the vision of embedding life and non-life insurance products. The business is led by Robert Burr as chief executive officer since September 2022.
Mumenthaler said: “The market environment today is vastly different from the one when iptiQ was created.”
Swiss Re plans to explore options for the various entities within iptiQ with the aim to maximise value for the group within a suitable timeframe. These plans are subject to regulatory approvals and notifications.
“The eventual exit from iptiQ could be multifaceted and stretched over time, given the iptiQ’s presence across a number of business units across Europe and the US, all at different stages of development and different points on the march towards break-even,” CFO John Dacey indicated during a briefing for journalists.
“We believe there is unambiguous value inside the group of businesses,” Dacey said, suggesting that some units “may well be of interest to potential acquirers.”
Dacey also mentioned that Swiss Re will manage the business “tighter” for entities that are close to breakeven and potentially wind down units which remain “far from break-even.”
The entire process may run “over the coming quarters and maybe even years,” he said.
Addressing the reasons behind the decision, Dacey pointed out that “the reality is that the uptake of demand … was lower than we might have expected.” And the need for iptiQ as a defence against the threats posed by new technologies may have proven less than initially feared.
He emphasised that the opportunities for Swiss Re’s core businesses in large commercial and reinsurance have been more favourable than projected seven to eight years ago. “We don’t believe we are the best owners of these businesses,” and the money invested, including via operating losses, is better redirected back towards core operations, Dacey said.
Dacey also hinted at some form of pending restructuring charge while declining to offer further hints. Though he assured that it would not affect Swiss Re’s profit targets. No trace of the very recent decision will be found in the Q1 financial statement, he noted.
In 2023, iptiQ reported a 29.3% increase in gross written premiums, reaching $1.1 billion, and significantly narrowed its pre-tax loss to $247 million from $362 million in 2022. The unit also grew its in-force policies from 2.2 million to 2.7 million over the past year.
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