For 20 years Swiss Re, the world's second-biggest reinsurer, has been trying to topple Munich Re from the number-one spot. With the planned $6.8 billion takeover, announced last week, of most of the insurance activities of America's General Electric, Swiss Re will be top dog at last. However, sheer scale is unlikely to be the main reason for Swiss Re's purchase. Reinsurance—the business of covering primary insurers' risks—requires a certain size to take on the financial costs of natural catastrophes, terrorist attacks and so forth, as well as permitting diversification across regions and business lines. But the top five reinsurers are well past that threshold. The best argument for Swiss Re's acquisition is the opportunities it might bring in the American market.
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