Swiss Re plans to make UBS Group Chief Executive Sergio Ermotti its chairman from next year, the world’s second-biggest reinsurer said on Tuesday, turning to a financial industry veteran with scant insurance experience.
Swiss Re has nominated Ermotti, who is due to step down from Switzerland’s biggest bank in November, for a board seat at next month’s annual meeting. He would then replace Walter Kielholz as chairman from 2021, the company said.
The move, reported by Reuters on Monday, comes as Swiss Re faces challenges from climate change, ultra-low interest rates and increasingly large jury awards in the United States that risk upending its casualty business.
Ermotti may lack insurance expertise, but he understands asset management, regulators and complex global financial institutions, Kielholz told journalists.
“It’s worthwhile taking this trade-off,” he said.
Swiss Re shares were up 2.5% in mid-morning trade.
UBS last month named ING Chief Executive Ralph Hamers to succeed Ermotti as CEO of the world’s largest wealth manager after a handover period starting in September.
Ermotti, who has led UBS since 2011, had been coy about his future career path. When news of Hamers’ appointment emerged, he declined to speculate whether he would eventually replace UBS Chairman Axel Weber, who intends to stay in his post until 2022.
Swiss Re began approaching Ermotti last year – “probably around October,” Kielholz said. Ermotti has agreed not to take the chair of any other companies, in line with Swiss Re policy, he added.
Ermotti is a former investment banker and stock trader who turns 60 in May. He earned plaudits for helping rebuild UBS after the financial crisis, with a focus on wealth management.
However, UBS missed its profit and cost targets for 2019 amid ultra-low interest rates in Europe and increased competition from U.S. rivals, forcing Ermotti to dial back some of the bank’s financial goals.
Swiss Re, led by CEO Christian Mumenthaler, generated a smaller-than-expected 2019 profit amid claims for a series of man-made and natural disasters and expenses for its U.S. casualty business. Net profit was $727 million.
Kielholz has been chairman of Swiss Re since 2009.
Ermotti’s switch to Swiss Re continues a changing of the guard in the Swiss financial elite.
Credit Suisse last month named Thomas Gottstein as CEO to take over from Tidjane Thiam, who resigned following a spying scandal.
Former UBS investment banking head Andrea Orcel was supposed to become chief executive of Banco Santander, but the plan fell apart in a row over pay.
(Additional reporting by John Revill and Tom Sims; editing by Silke Koltrowitz and Mark Potter)