UBS chief executive Sergio Ermotti is to become chairman of insurance group Swiss Re, ending growing speculation in Zurich that he would eventually step up to replace Axel Weber as chairman of the Swiss bank.
Mr Ermotti will join the Swiss Re board next month and become chairman in 2021, the reinsurer said on Tuesday. He will replace Walter Kielholz, a former chairman of Credit Suisse who has been on the board of the insurer for more than two decades and chairman since 2009.
Mr Ermotti’s contract with Swiss Re does not allow him to take on another chairmanship. He had been seen as a potential candidate for chairman of UBS when Mr Weber, who has been on the board of the bank since 2012, decides to step down.
UBS said last month that Mr Ermotti would be replaced at the bank by Ralph Hamers, chief executive of Dutch lender ING, one of several changes under way in the top management of European banks, including HSBC and Credit Suisse.
Mr Ermotti will leave UBS in November after nine years as chief executive, during which he shrunk the investment bank and focused on growing wealth management. His tenure was partly overshadowed by a €4.5bn penalty that a French court imposed on UBS last year in a tax evasion scandal.
The Swiss executive received SFr12.5m ($12.9m) in compensation from UBS last year, down 11 per cent from SFr14.1m in 2018. The cut reflected widespread shareholder protests at UBS’s high pay levels. His compensation at Swiss Re has not been disclosed yet.
Swiss Re has been talking to Mr Ermotti about the job since October last year. Although he has never run an insurance company, Mr Kielholz said that reinsurance was “not so different from banking”.
“Sergio Ermotti is very familiar with the asset side of our business,” said Mr Kielholz. “He’s market-savvy, he knows about asset management and he understands corporate finance issues.”
He added: “What I like is his international network . . . with governments, financial institutions and multinationals. The company needs this international network.”
Swiss Re is recovering after a tough year in which profits were hit by natural catastrophes in the US, Japan and Australia. It has also been restructuring its corporate solutions business, which serves large companies, after a series of heavy claims.
Mr Ermotti started his career as an investment banker with Merrill Lynch, and also had a stint with UniCredit before joining UBS in 2011. He was elevated to chief later that year after his predecessor stepped down.
Mr Kielholz took on the Swiss Re position during the financial crisis, shortly after the company received a capital injection from Warren Buffett’s Berkshire Hathaway. Since then, Swiss Re has recovered, with the share price rising from SFr28 when he became chairman to more than SFr93 today.
Over the past few years, he has steered the reinsurance group through talks over a deal with SoftBank, which led to nothing, and the sale of ReAssure, its UK life insurance business, to Phoenix Group.
Mr Ermotti said that Mr Kielholz had “immensely furthered the development not only of Swiss Re, but the entire Swiss financial centre”.
