Munich Re is considering selling off its asset management unit to US industry giant Guggenheim, according to reports.
According to the Wall Street Journal, the German reinsurer has entered into preliminary talks with the asset manager to sell off the arm, Meag Munich Ergo AssetManagement, in a transaction which would involve it taking an equity stake in Guggenheim.
However, the report noted that the talks remained in early stages and that there remained no guarantee of any deal, with the size of the equity stake in Guggenheim on offer also unclear, citing sources familiar with the matter.
The deal could help Munich Re produce improved returns on its vast investment portfolio of some $290bn after several years of challenging investment environments dominated by low interest rates.
Guggenheim is a specialised bond house which oversees over $250bn in assets, and the newspaper reported that the firm is seeking to grow its footprint outside of its traditional US market.
And Munich Re may not be the only acquisition on the horizon, with Bloomberg reporting that the asset manager is consulting with government funds, investment pools and other international insurance companies in Europe, the Middle East and Asia.
Last year Munich Re posted a EUR476mn loss in its property and casualty (P&C) division as the catastrophes of H2 pushed the reinsurer’s P&C combined ratio to 114.1 percent.
However, while the loss burden for the quarter was severe, Munich Re said reinsurance capital remained plentiful during the January renewal seasons, leading to more moderate overall price increases while some markets were “freed from the pricing pressure of previous years.”
But despite taking a hefty catastrophe hit last autumn, the company remains the industry’s largest reinsurer after writing $35.67bn of reinsurance premiums in 2017, ahead of its rival Swiss Re in second place and a $29.95bn book.