COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case no: 20/LM/Mar06
In The Large Merger Between:
Swiss Reinsurance Company Acquiring Firm
And
GE Insurance Solutions Corporation and its subsidiaries Target Firm
Reasons for Decision
Approval
1. On 11 May 2006 the Competition Tribunal issued a Merger Clearance Certificate approving
the transaction between Swiss Reinsurance Company and GE Insurance Solutions
Corporation and its subsidiaries. The reasons for this decision follow.
The Transaction
ii.In terms of the proposed transaction, Swiss Reinsurance Company (“Swiss
Re”) intends to acquire, either directly or via one of its whollyowned
subsidiaries, the shares of GE Insurance Solutions Corporation (“GE
Insurance”). 1
3. According to the parties, the transaction will inter alia enable Swiss Re to enhance its overall
insurance and reinsurance portfolios, thereby allowing achievement of greater
diversification, including, geographic diversification and strong direct distribution presence.
Competition analysis
4. Both parties are globally active in the supply of reinsurance and of direct insurance.
However, in South Africa, the parties’ activities overlap only in respect of reinsurance. 2
1 GE Insurance is a holding company for approximately 50 subsidiaries, which are controlled by General
Electric Company (“General Electric”). General Electric will retain one of GE Insurance’s subsidiaries,
which operates the US life and health business. This subsidiary will accordingly be transferred out of GE
Insurance prior to the acquisition by Swiss Re and will not form part of the proposed transaction. Page 35
of the Merger record. This is an international transaction and at the time of our approval had already been
notified and approved in the EU, Israel, US, Turkey and South Korea.
notified and approved in the EU, Israel, US, Turkey and South Korea.
2 According to the parties, “reinsurance” contracts are contracts of insurance made between an insurance
company (A) and a reinsurer (B) under which A transfers risk arising from its insurance portfolio to B.
Under a reinsurance contract B agrees to indemnify A in respect of defined losses incurred by A under
5. Reinsurance involves both life reinsurance and nonlife reinsurance. 3 Since GE Insurance is
not active in life reinsurance in South Africa, the only issue for consideration is the overlap
arising from the merging parties’ involvement in nonlife reinsurance. 4 While the parties
opted for a narrow product market definition i.e. the market for the writing of nonlife
reinsurance policies, the Commission instead analysed both the broad market for
reinsurance and the narrow sub markets for life reinsurance and nonlife reinsurance.
6. The Commission and the parties agree that the relevant geographic market is global, due to
the fact that customers can source reinsurance within international markets and are not
confined to national borders. 5 The market share data provided by the Commission is
tabulated below:
Firm Reinsurance market Life reinsurance Nonlife reinsurance
Global RSA Global RSA Global RSA
Swiss Re 8.1% 35% 10.6% 35.35% 7.1% 37.7%
GE Insurance 1.7% < 1% 1.8% 1.7% < 1%
Post merger 9.8% 36% 12.4% 35.35% 8.8% 38%
7. From the table above, it is clear that the accretion in market share is relatively insignificant
due to GE Insurance’s small presence both globally and in the South African market. The
Commission’s investigation revealed that customers for reinsurance are generally direct
insurers or brokers of reinsurance and are wellresourced, knowledgeable and sophisticated
purchasers. Both the Commission and the parties agree that switching from one reinsurance
supplier to another is relatively easy.
8. We do not make a definitive finding on the relevant market, as we are of the view that
regardless of how the market is defined, the merger does not raise any significant
competition concerns.
Conclusion
competition concerns.
Conclusion
9. There are no public interest issues, which arise and w e accordingly approve the transaction
without conditions.
A’s portfolio of insurance contracts (e.g. a specified share of losses or specified losses in excess of a
threshold amount. An insurance company will use reinsurance as one of the principal means of
managing its portfolio of risks. Reinsurance is an important means whereby the insurance industry as a
whole spreads risks and makes available additional capacity to underwrite risks in favour of end
consumers. Pages 3640 of the merger record.
3 In South Africa, these are known as longterm and shortterm policies respectively.
4 According to the parties, GE Insurance has no direct sales of its nonlife reinsurance products in SA
and its South African business is written by international thirdparty brokers.
5 The merging parties further submit that international broking firms mediate reinsurance on a world wide
scale, and that any reinsurance company or other provider of reinsurance can provide products in South
Africa without the need for physical presence as in the case of GE Insurance.
2
May 2006
N Manoim Date
Concurring: U Bhoola and Y Carrim
For the merging parties: K de Kock and A Norton (Webber Wentzel Bowens)
For the Commission: L Lamola and S Nunkoo (Mergers and Acquisitions)
3