In an effort to increase its investments and to expand overseas, China Pacific Insurance Group is reportedly now in talks to buy a stake in the Switzerland-based reinsurance company Swiss Reinsurance Company Ltd. In return, Swiss Re is reportedly also willing to purchase a minority stake in China Pacific as part of the deal.
According to reports citing sources familiar with the talks, China Pacific is apparently mulling over purchasing a $2 billion stake in Swiss Re. Meanwhile, the Swiss reinsurer is looking to spend between $500 million to $1 billion to purchase a minority stake in China Pacific. The same sources have revealed that the discussions are apparently now in the advanced stages and an agreement may be reached very soon.
In a statement released on Wednesday, Swiss Re stated that it is currently exploring investment involving the sale of new securities by China Pacific. The company reiterated that no agreements or deals have yet to been reached. Swiss Re stated that there are still a lot of factors to consider and that both parties would have to iron out details to reach an amicable deal.
Following the news of the mutual share buying, Swiss Re saw its stock prices increase by as much as 2.3 percent in Zurich. Swiss Re currently has no plans of issuing new stocks and the company declined to comment on whether or not China Pacific would be buying a stake.
In China, China Pacific also saw its share prices increase on Thursday morning. The company's listing in Hong Kong rose by 1.2 percent, while its stock in Shanghai rose by 1.7 percent following the release of the reports.
In September, China Pacific had stated that it plans to sell global depository receipts (GDR) on the London Stock Exchange. The sale would represent around 10 percent of the company's A-share capital. Sources have revealed that Swiss Re could invest in China Pacific through its GDR.
A partnership with China Pacific is in line with Swiss Re's plans to expand its footprint in Asia. The Swiss company had previously stated that it aims to capitalize on the growing demand for insurance among the rising middle class in China and other Asian countries.
In May, SoftBank Group officially ended its pursuit of a stake in the Swiss company, resulting in its invitation for new investors. Swiss Re currently does have some interest in Asia, given that it is a minority stakeholder in the Asian insurance company FWD Group.
