Masayoshi Son, SoftBank Group Corp.'s billionaire founder and CEO, is taking a step toward becoming a digital-age Warren Buffett.
SoftBank has entered talks to buy as much as a third of reinsurer Swiss Re AG, said people with knowledge of the discussions who asked not to be identified. The transaction could be valued at more than $10 billion. Swiss Re confirmed the talks and said they are at a very early stage. Its shares soared.
Son would be following titans like Buffett in buttressing their conglomerates with the healthy cash flows provided by reinsurance. SoftBank has made a dizzying array of investments over the last year as he reshapes Japan's largest mobile-phone carrier and majority owner of Sprint Corp. into a force in the technology world.
"Given SoftBank's technology-vision, Swiss Re makes sense as a target given its extraordinary research & development capabilities." Daniel Bischof, an analyst with Baader Helvea AG in Zurich, said in a note to clients.
Shares of Swiss Re jumped as much as 6.8%, the most since November 2011. SoftBank rose about 1% in Tokyo on Thursday.
SoftBank, which has raised $93 billion of a planned $100 billion Vision Fund, the world's biggest private equity pool, has taken stakes in businesses including ride-hailing, chipmaking, office-sharing, satellite-building, robot-making and even indoor kale-farming.
Reinsurers help insurers shoulder the costliest risks, like claims from hurricanes and earthquakes. Recently, however, the industry has faced some challenges. A glut of capital — and new ways Wall Street dreamed up to transfer risk — has pushed down the prices that the companies can charge for coverage.
Even so, reinsurance has remained attractive to big-money investors. Buffett has used the "float" — or premiums held by such businesses before paying claims — to fuel his stock picks and acquisitions at Berkshire Hathaway Inc. Buffett has his own history with Swiss Re: he gave the reinsurer a 3 billion-Swiss franc ($3.2 billion) capital injection during the height of the financial crisis.
Exor NV, the investment company for Italy's Agnelli family, bought control of Bermuda reinsurer PartnerRe Ltd. two years ago as a way to diversify holdings, which range from Fiat Chrysler Automobiles NV to the publisher of the Economist magazine. Hedge-fund managers from David Einhorn to Dan Loeb have also started reinsurers in recent years.
