Canopius’ APAC expansion builds around specialty lines demand
November 1 2024 by InsuranceAsia News
Global specialty (re)insurer Canopius will continue to expand its Asia Pacific (APAC) footprint, enhancing its capabilities and empowering local teams to make decisions best serving their markets, said Soon Keen Lee, CEO for APAC, Middle East & North Africa (MENA) of Canopius.
The company’s strategy focuses on leveraging and scaling up its existing franchise and increasing market penetration as it aims to accelerate growth for reinsurance, expand in Australia and enhance product offerings across the region.
“Our goal is to achieve a balanced portfolio split between insurance and reinsurance and between both Singapore and Australia.”
In 2023, Canopius’ insurance contract written premium increased by 35% reaching US$300 million with record underwriting results and a net combined ratio of below 85%. The company aims to continue this positive trajectory this year.
Notably, its Australian accident and health business saw significant improvement off the back of increased travel volumes during 2023.
“We also benefited from the first year of production from a newly hired team of treaty underwriters in Australia, as well as favourable market conditions in Singapore on the reinsurance portfolio,” Lee added.
The priority for Canopius is to maintain disciplined growth in the specialty lines where it has a differentiated offering, like energy, marine, agriculture treaty, and structured credit, which cater to the region’s need for tailored risk solutions, said Lee.
“For example, our agriculture reinsurance line addresses the growing demand for climate-related risk coverage, such as crop-yield shortfalls and animal mortality, areas where Canopius has established a strong presence.
“We are the only syndicate in the Lloyd’s Asia hub with a global desk focused on agriculture treaty, giving us a unique perspective and competitive edge.”
Rising specialty demands
While property insurance continues to be a fundamental part of the market in APAC, there is a growing demand for capacity and expertise in specialty lines, according to Lee.
“This is driven by the need for more tailored solutions to address increasingly complex risks, particularly in areas such as renewable energy and structured credit.
“These specialty lines are becoming the key growth drivers as businesses across the region look for more sophisticated and flexible risk management solutions,” she said.
The marine insurance sector, for example, is seeing increased demand for customised coverage, driven by the complexity of marine risks in a region that includes highly active shipping lanes, geopolitical tensions and natural catastrophe exposures, she added.
“As the largest syndicate in the Lloyd’s Asia hub, we are well-positioned, but staying ahead requires constant innovation and a deep understanding of regional risks. This competitive landscape necessitates a strong focus on maintaining underwriting discipline while ensuring we provide differentiated, client-centric solutions.” Soon Keen Lee, Canopius
Another area of growth is structured credit and political risk, which has become increasingly important for businesses operating in the region. As companies engage in cross-border trade and investment, particularly in emerging markets, they face heightened risks from non-payment and political instability.
“We aim to continue building on our expertise in these areas and providing solutions that help businesses navigate the complexities of the evolving risk environment,” she said, adding that the (re)insurer will strive to offer a complete product suit for our core clients by promoting a cross-class approach and enhance our engagement for our brokers and cedents.
Regional headwinds
The company, however, faces several challenges, including regulatory complexity across different jurisdictions, increasing competition within the specialty (re)insurance space, and macroeconomic factors, such as inflation and rising interest rates affecting cost of claims, investment return and overall business profitability.
“As the largest syndicate in the Lloyd’s Asia hub, we are well-positioned, but staying ahead requires constant innovation and a deep understanding of regional risks. This competitive landscape necessitates a strong focus on maintaining underwriting discipline while ensuring we provide differentiated, client-centric solutions,” Lee said.
Climate change and talent retention are other headwinds.
In terms of talent retention, Lee said that there is high demand for specialised skills and the specialty insurance market is always at ‘war’ with other sectors to attract the best talent.
“We know we offer a lot of development opportunities to people looking for the best roles, we just need to do more to tell the world that specialty (re)insurance is a rewarding and dynamic place to work,” she said.
-
BHSI | Managing non-Asian exposure in long-tail lines
While US-exposed business can look attractive to Asian carriers, managing the volatility around the long-term results and the ability to model those losses are crucial, say BHSI’s Marc Breuil and Marcus Portbury.
-
Sedgwick | To Handle CAT Claims Well, Multi-Step Preparation is Key
When it comes to risk, it’s not a matter of “if” it’s a matter of “when” an event will occur.
-
HSBC Asset Management | Is it time to relook at Asian currency bonds?
With diversification and performance high on investors’ agendas, it seems a good time for global portfolios to revive allocations in Asian local currency bonds – including Hong Kong dollar (HKD) bonds.
-
PineBridge Investments | Why Asian insurers are exploring private credit and CLOs
The recent rollout of risk-based capital regimes across Asia calls for a closer alignment between insurers’ assets and liabilities. We explore potential ways to maintain a healthy investment yield and robust returns on regulatory capital.
