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Critical rethink for Swiss Re

Culture clash concern as takeover of GE Insurance Solutions pitches leading reinsurer back into the CI market

Swiss Re is set to re-enter the guaranteed critical illness market following its acquisition of GE Insurance Solutions.

The firm left the guaranteed rate market in 2002 but will become the dominant player in the UK market with the takeover, raising concerns that any difficulty in Swiss Re’s integration of GE could have repercussions for the domestic protection market.

Scottish Widows protection marketing director Nick Kirwan says the business have different cultures and attitudes to guaranteed rates.

He says: “It seems that they have diametrically opposed strategies on guaranteed rates on critical-illness insurance. There may be some tension between the two, as Swiss Re originally said guaranteed critical-illness insurance was doomed but has now teamed up with someone with a huge share of the guaranteed rate market. No one wants to see disturbance in the guaranteed rate market, it is not in consumers’ interests.”

Swiss Re says it is still competing with GE in its core reinsurance market until the takeover deal is completed next June and it has been considering re-entering the guaranteed rate market on its own before the deal but is keeping its plans under wraps.

The 4.43bn GE acquisition will put Swiss Re ahead of Munich Re as the world’s biggest reinsurer.

Swiss Re spokesman Tim Dickenson says: “It is early days. The agreement is subject to various approvals and is expected to take place in the middle of 2006. On a case by case basis, we will continue to analyse opportunities for re-entry to guaranteed critical-illness insurance. This is among the issues to be evaluated.”

Direct Life & Pensions sales and marketing director Richard Verdin says: “It may just be that Swiss Re now discovers a way of working that they could not have seen previously or vice versa.”

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