Macaskill on markets: SoftBank’s strange insurance policy
An investment of around $10 billion in shares of a reinsurance firm does not seem like an obvious move for a technology conglomerate like SoftBank, but its founder Masayoshi Son relishes any opportunity to surprise the markets.
News of the potential purchase of a 33% stake in Swiss Re prompted the vague but optimistic talk of potential technological synergies that accompanies any SoftBank deal.
Swiss Re played along with this narrative in its full-year 2017 earnings announcement on February 23 by highlighting the work it is doing on technology solutions, such as a machine-learning pricing platform for insurance policies.
“This platform can be leveraged for multiple parametric insurance products, such as those covering earthquakes or delayed airline flights,” Swiss Re said.
A key question for followers of SoftBank is how traditional financial leverage will be deployed by a company that has also gone long the complex structuring abilities of a huge team of bankers led by Rajeev Misra, former head of credit at Deutsche Bank.
It could be argued that the potential stake in Swiss Re will provide Misra with influence over around $250 billion of investment firepower – before application of additional leverage.
Misra heads the $100 billion SoftBank Vision Fund that is the largest technology investor in the world. Some $93 billion of the total has already been committed by investors including Saudi Arabia’s sovereign wealth fund and Apple, so that money is effectively in the bank.