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“Low-level aggregate covers will not be in our appetite,” Sharon Ooi, member of the executive board – property & casualty for Hannover Re, told InsuranceAsia News.
“There is a need to understand what the underlying exposures are and be able to have an adult conversation to say what’s within our appetite and what’s not within our appetite,” said Ooi, who has regional responsibility for Asia Pacific for the reinsurer.
“Programs with losses that is not in line with our view of the exposures, then we would look to reduce that or not continue to provide capacity for that coverage, unless we’re getting an adequate return.”
“There will be markets that may struggle if they don’t want to address any pricing disconnects that have occurred,” she added.
Insurers and reinsurers are taking a clear view that you need to take inflation and increased loss expectations into account as we go to the upcoming renewals, according to Ooi.
In terms of pricing, the focus at Hannover Re is the need to ensure sustainable returns on capital. That along with loss drivers such as inflation, growth in exposure, and increasing frequency and severity of cat losses means that, where necessary, prices will go up on a nominal and risk-adjusted levels, she pointed out.
“I think with hardening everyone expects that reinsurers’ profit margins increase, but that’s not really the case because price increases are actually related to factors like inflation, exposure growth and high frequency and severity of nat cat losses,” she said.
While costs will always be a discussion point in terms of ensuring that there is the right price that the client is willing to pay and the reinsurer is willing to give.
“I think it just means that different structures will be talked about – increased deductibles will definitely be part of the conversation,” Ooi said.
There are perils that need to be considered, but it’s beyond just the perils that are normally talked about.
“As an example, strikes, riots and civil commotion is something that needs to be addressed if there is exposure there,” she said.
“In terms of capacity, I do think that everyone’s coming to terms with it. I would expect capacity to be available and it would be quite disciplined. But there will always be surprises. Unfortunately, there are upheavals in the Middle East, the Ukraine war is still ongoing, but I do believe that at the renewals you’d get capacity at the right price,” she pointed out.
“If there is a program with losses that is not in line with our view of the exposur es, then we would look to reduce that or not continue to provide capacity for that coverage, unless we're getting an adequate return.”
Sharon Ooi, Hannover Re
APAC markets
Asia Pacific is incredibly diverse as a marketplace, so there will be various different responses to loss activity.
“We have teams on the ground in Asia and they are always in dialogue with clients and it’s not always about renewals. There are opportunities to look at, for example, capital fungibility solutions and the like, which can be enacted at any time. So that dialogue with clients is beyond just the treaty renewals,” she said.
“What’s important is just the recognition that there is a new normal in terms of that loss activity,” Ooi said, pointing out that there is a need for mitigation and to build resilience and everyone has to play a part.
Some responses are actually government intervention-driven in terms of focusing on mitigation, which could help ease pressures for the insureds and (re)insurers will benefit, she added.
While proposals like insurance pools, such as the cyclone pool in Australia, Ooi said: “Pooling is a concept that can help, but the key is ensuring the affordability and the availability of insurance.”
“I guess the recent example of Tasmania, where they removed the fire services levy will help ensure that there is more affordability and access to cover.”
“Having different types of products like parametric products, which is something that we also support at Hannover Re, could help as well,” Ooi said.
Non-property lines
“I expect non-property lines to continue to grow and this is driven by demand and the growing maturity of the Asia Pacific markets. You see growth across all the different lines of business – infrastructure, credit, engineering, cyber, renewables. However, it is a smaller risk pool from a direct insurance perspective,” Ooi continued.
She added: “We also see growth in specialty lines like agriculture and again partly driven by government support like in India and China.
Commenting on cyber, Ooi said: “We absolutely have the appetite to do cyber reinsurance. We see some activity in cyber lines in Asia Pacific, but it’s small at this point in time and the growth rates continue to be double digits. We continue to discuss with clients as to how we can support them. We do expect it to be a growing line of business.”
The 19th Singapore International Reinsurance Conference (SIRС) themed ‘reinsurance reset’ has welcomed 2,772 delegates from 72 countries.
Mark Haushofer, chair of the Singapore Reinsurers’ Association, opened the conference in the Marina Bay Sands on October 30, noting the caliber of attendees, showcasing both the strength and the diversity of the industry which is on the tip of a revolution.
“[The reinsurance reset] atomises the key challenges that our industry is facing, and what needs to be done in the context of the prevailing uncertain and volatile risk landscape illustrated by prominent inflation, rising interest rates, economic depression, geopolitical tensions, cybercrime and increasingly frequent and costly climate related disasters,” he said.
He noted the overdue return to underwriting discipline, and its implications after enduring years of weak performance and soft market conditions, hoping that such momentum will sustain.
Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), noted Asia growth and infrastructure development, nat cat susceptibility, a growing elderly population and retirement safety as key regional growth drivers for the market.
Three areas to better address in APAC include risk mitigation, key data gaps on risks in and unlocking new insurance capacity. There are also emerging risks coming from US-China, Russia-Ukraine, Israel-Hamas tensions that have influenced global markets such as commodities, interest rates and climate risk.
He explained that Singapore has strengthened its position as a global (re)insurance market by increasing capacity, promoting insurance demand and fostering a conducive trading environment, Since 2013, gross written premiums grew by 80% to US$12.9 billion for insurance, and tripled to US$21 billion for reinsurance, an annual average of 13.6%.
Since 2013, Singapore has become the Asian hub for carbon credits, energy transitions and intellectual property. 24% of market share is in Singapore, 16 of the 25 top-reinsurance made it its regional hub, also working in North and South Asia and Australia.
Menon said: “The Nanyang Technological University of Catastrophe Risk Management, working with Asean governments and Secretariat has built an integrated data and analytics platform for flight title, and earthquake risks for the Asean region. But there are still very sizable data gaps with healthy economic growth. Additional urban centers and industrial centers have emerged in Asia, and the risks have evolved. There is simply not enough up to date, high resolution data on economic exposures and key parallels in Asia.”
APAC reinsurance premiums are projected to grow at an annual average of 7% from US$171 billion in 2021 to US$246 billion in 2026.
Menon noted that there’s still a sizeable protection gap with industrial Asia centres emerging in recent decades and not being supported by enough data on economic exposure and key perils. Problems include nat cat exposure leading to US$80 billion dollars of economic losses in 2023 (so far), of which only 14%, US$11 billion, was insured. Flood losses accounted for more than 60% of nat cat losses last year.
Improvements could include robust drainage systems, green plantations acting as natural flood buffers and insurers investing in sustainable agricultural efforts.
Cyber risk
Asian economies are also the most exposed to cyber risk given the fast pace of digitilisation.
APAC accounted for 31% of all cyber incidents globally in 2018. The cyber insurance risks are expected to triple by 2025.
Menon said: “A deeper partnership between the insurance industry the cybersecurity sector, and policymakers can help improve cybersecurity and reduce cyber risk. We see the insurance industry publishing research on the types of cybersecurity controls, which made a difference based on the insights from claims data.”
He added: “We need to focus in addressing data gaps in Asia. This is the unfinished business from 10 years ago. In many cases, while data exists, it is fragmented across government agencies, reinsurers insurance brokers, academics and businesses. Data is in different formats not trained, not standardised, and hard to use, and access. Data gaps are particularly acute in new areas such as pandemic and climate risk, which are complex, evolving, and less understood.”
“In many cases, while data exists, it’s fragmented between academics, businesses, regulators, insurers – in particular acute in pandemic and climate risk, less understood, hard to use,” said Menon.
Unlocking new insurance capacity could be done through initiatives such as insurance-linked securities (ILS), captive insurance and sovereign catastrophe-risk pools.
MAS has a new grant to support ILS and is now exploring the introduction of corporate structures.
Captive insurers are becoming more common are corporates are increasingly creating captives for proactive risk management which is demonstrated by 82 captives in Singapore growing 14% to US$2.2 billion of premiums.
Regarding the most fragile economies such as the Pacific, Africa and Caribbean, risk pools remain the most viable solutions efficient for tropical cyclones, earthquakes, drought and epidemics with an example of pool US$1.5 trillion to support flood risk in Laos.
Miller Insurance is planning to expand in Asia across both territories and product lines as it continues its growth trajectory away from its traditional heartland of facultative reinsurance in the region, InsuranceAsia News can reveal.
“The idea is we want to expand three ways: by territory, by product line, and by distribution type,” said Ron Whyte, head of Asia at Miller. “By that I mean that, when I came to Miller here two years ago, we were a very good fac broker here – mainly property and energy – but of course Miller in London is a full suite of all product lines. So what we’ve added in the past couple of years is a marine capability at the beginning of last year with Nick King; Matthew Hooker in the energy space; and a financial lines leader starting later this week.”
“We will be looking at other areas in due course: credit and political risks; accident & health; and whatever else makes sense in this geography that Miller is already a specialist at,” he said. “It’s very much about focusing on what we do well, which is specialty insurance and reinsurance.”
Whyte added that the broker’s Asian strategy also encompasses other countries, following its expansion into Japan last year with the acquisition of Tokyo-based Lead Insurance Services, a specialist in hull, war risks, and protection and indemnity insurance.
“We’re growing in every direction: geographically, by line of business, and into the retail and treaty space, as well as fac. Not sticking a flag everywhere we go, but we have evaluated the strategically important territories.”
Ron Whyte, Miller
“We will be looking to expand our Japanese business into other lines of business,” he said, adding that more territories are also in the pipeline:
“Other geographies we’re actively looking at and engaged in conversations with are Indonesia, Malaysia, Hong Kong and Korea. In addition to doing fac and treaty, in some of those territories it will be both a retail and a wholesale and reinsurance presence. So we’re growing in every direction: geographically, by line of business, and into the retail and treaty space, as well as fac. Not sticking a flag everywhere we go, but we have evaluated the strategically important territories.”
In September, Miller in Asia made waves with a raid on Lockton as it established a new treaty team, led by Richard Broad as head of treaty APAC. Broad was most recently regional head of reinsurance for Lockton APAC, also based in Singapore. Alongside Broad were four other senior appointments: Bruce Ford and Pei Nee Goi in Singapore and Jo Garnett and Hui Sin Low based in Malaysia.
Miller also recently announced a new long-term partnership agreement with Central Insurance Services (CIS) in Thailand, which it claims will enhance the firm’s energy proposition and reach in the region. Miller is working with Central to service energy clients based in Thailand, providing technical consulting services, risk engineering, reinsurance placement and claims services.
According to Whyte, underpinning its Asia expansion strategy is financial support from Singapore itself: “We’ve got this incredible backing from our private equity company Cinven in the UK, but what’s golden for us in Asia is GIC, the sovereign wealth fund of Singapore, arguably the best brand in Asia,” he said. “It symbolises the same thing that Singapore does: long-term commitment and ethical planning. GIC is all of those things, and very supportive of us. So we have a very attractive platform, where we have very strong financial backing – Asian backing in Asia – and a platform to build on.”
“I like building things,” said Whyte. “And we’ve already assembled a pretty strong management team.”
In August it was announced that Nigel Cross, former head of Miller Singapore, would step down from the position, but assume additional responsibility for leading the broker’s underwriting market engagement strategy in Singapore and the wider region.
“Nigel is recognised as one of the best fac brokers in the Asian market, and he’s now spending his time totally focused on that, servicing clients and markets. As well as leading our thrust with our ceding company fac clients in the region, he’s also our head of distribution, so he manages the relationship between us and the people writing our business, and obviously working very closely with Richard Broad on the treaty side.”
Whyte is a well-known figure in the market who famously ruffled feathers at Guy Carpenter in 2007, when alongside Julian Samengo-Turner, his then co-ahead at GC Fac, and UK head Marcus Hopkins, he left to join nascent broker Integro. Guy Carpenter subsequently launched legal proceedings which were settled by Integro before court proceedings began.
Reinsurers will continue to push for rate increases and restructuring of programs in 2024, especially in Asia Pacific, where the price hikes in the last renewals were moderate compared to the changes seen in North America and Europe, said Denis Pehar, chief market officer, Allianz Re.
“I think for the upcoming 2024 renewals, we will still remain in the hard market. However, we will not see, especially in North America and Europe, the rate increases like last year.”
“In Asia Pacific, it was rather subtle, the rate increases were rather moderate compared to other regions and treaty structures vastly remain in place with some minor adjustments.”
“Despite the fact that there were no major losses in the recent few years and the markets were performing relatively well. The margins reinsurers achieved in the region is not sufficient at this stage,” Pehar noted.
In Asia Pacific, Pehar said that there was a gap in pricing and structures compared to the other two main regions and that gap needs to close.
“The gap will have to close over time. I don’t think it will happen within one year. It’s going to be a steady process, let’s say over the next few years, but that’s something definitely we would like to see,” he said.
“I think there is a clear trend in the global reinsurance market that the reinsurers are shying away from frequency covers, it will become harder to place any aggregate XL covers. And that’s a trend we will see also in 2024,” he pointed out.
“The aggregate covers that are still in place were already suffering last renewal, I think it will be a struggle for the cedents to place the business in the market this time around. Either they will have to significantly restructure the programs, or agree to substantial price increases.
The preference is for named perils, per occurrence, per event covers instead of aggregate covers.
Another important trend for Asia Pacific, Pehar said, is that earthquake insurance rates will go up definitely after the major losses in Turkey and Morocco.
“That’s something reinsurers definitely will insist on and also a review of modelling for earthquake peril,” he said.
“I think there is a clear trend in the global reinsurance market that the reinsurers are shying away from frequency covers, it will become harder to place any aggregate XL covers. And that's a trend we will see also in 2024.”
Denis Pehar, Allianz Re
Capacity question
While most carriers talk about the lack of reinsurance capacity, Pehar believes that there is more than enough capacity out there.
“I don’t think there was a shortage of capacity during the last renewal and there won’t be a shortage of capacity for the next renewal, it’s just a question of price,” he noted. “Reinsurers are just more careful when and how to allocate their capacity in the market. It has to be the right price.”
While Pehar said there is new capital coming into the market, it is relatively limited.
“I’m not sure how much that will impact APAC. I think that’s not going to be any important driver for the upcoming renewal.”
“When it comes to catastrophe bonds and alternative capital, obviously there is an increase in availability and in demand. But for APAC, I don’t see it as a game-changer for the upcoming renewal,” he added.
APAC plans
Asia Pacific has always been an important market for Allianz Re. Despite mounting headwinds, volatile markets and challenges, there is an abundance of business growth potential. China, India, Japan amongst others have been the driver for Allianz Re growth.
“APAC was always a core market for us and will continue to be a core market. Definitely, we are targeting growth in the region, but it will be moderate,” Pehar said.
The region accounts for roughly one-third of Allianz Re’s third-party reinsurance portfolio, which stands “at €2.5 billion premium income for the underwriting year 2023”.
Globally, Allianz Re managed to double its third-party portfolio in the last two to three years, Pehar said.
While the focus is on the big three markets in the region, “that doesn’t mean we are not looking into the other territories in the region”, he noted.
“South-East Asia is becoming more and more important definitely. It’s been within our scope. Also, given that our office in Singapore is very close to those markets, we are observing the trends in the region and whenever we see an opportunity to develop or to grow our business we will do that.”
When it comes to Korea, Pehar remains circumspect about the opportunities given the risk losses the market has seen in the last year.
“Our exposure in Korea right now is relatively limited. While the prices have risen, it is not sufficient. Therefore, we are closely observing the upcoming renewals,” he said.
Growth lines
Catastrophe covers, crop and structured solutions are the three main growth areas for Allianz Re, said Pehar.
“For catastrophe covers, there is an increased demand for protection in the region and given the capital market developments, we believe that it will be increasing over the next one to two years. Crop, in certain markets like India, has over the last decade, become a very important segment,” he said.
Allianz Re’s structured solutions offering is pretty broad Pehar said, starting from straightforward capital-relief quota shares to structured loss spread treaties.
He thinks that the demand from the Asia Pacific market for such products is set to grow.
“I think the APAC market is absolutely aware of this segment and also the product offerings. So far, there has been no demand or no need for these types of covers. But given the hardening in the market and the developments in the capital markets, this will change over time,” he added.
French reinsurer CCR Re, fresh from its partial separation from CCR group and capital infusion by the new owners, “has a lot of ambition and more capacity” as it sets out to double its premium income in five years.
Talking to Insurance Asia News ahead of the Singapore International Reinsurance Conference, Hervé Nessi, chief underwriting officer, CCR Re, said: “In the next five years, we want to do what we have already done in the last five years – double our premium income and achieve a 10% target return on equity.”
“Five years ago, we underwrote less than €500 million, at the end of 2023 we will underwrite more than €1 billion. Our target is €2 billion by 2027,” he said.
Asia, which remains an important pillar for the company, is very much integral to its growth plans.
In Asia Pacific, Nessi said: “We are optimistic for 2024. We are ready to allocate additional capacities in the region as soon as discipline is confirmed in terms of both prices and contractual conditions.”
“Our profile is clear: we are a mid-sized reinsurer, financially strong and reliable on a long-term basis.”
Nessi said: “We are definitely a relevant substitute to the large global reinsurers, in the cedents panel, not within a transactional approach where we underwrite business, but within a relational approach where we underwrite clients with an “across the board” contribution– life and non-life, specialty lines”.
Since its acquisition by French monoline mutual insurers SMABTP group and MACSF group in July, Nessi said, nothing has changed for the reinsurer in how it does business. “We will remain fully autonomous, with a clear wall between shareholders’ activities and ours.”
“For them, the investment is a long-term strategy. This is an opportunity to deploy their excess capital in a very international activity. With this in mind, the choice of CCR RE was particularly relevant insofar as our historic multi-country, multi-line underwriting model will guarantee a high level of diversification not only in relation to the CAT business but also to their core business.” he added.
“The good news for our clients is that they bring €200 million of additional capital, representing about 20% of our current valuation” he explained.
“We underwrite what we know with those we know,” he said.
One strategy that Nessi said has led to good results for CCR Re for 5 years is generalising its “cross functional multi-branch approach with clients” and using its growing CAT capacities “as a leverage to obtain and broaden our relationship with our best clients, across lines and countries”.
Despite the stated ambitions, CCR Re plans to focus on its existing markets in the next five years and has no plans to expand its reach at the moment.
“We have a unique model that allows us to underwrite almost everything from France. We truly believe in our model.”
“Thus, we are very agile, it is very convenient for us to be reactive with our clients and to develop our “across the board” relationships … Moreover, it is still easier for me to monitor our development!” he noted.
However, the centralised model means that CCR Re doesn’t write much business in markets “that are too far from Paris” like Australia and New Zealand nor “in a small number of countries that are too uncertain”. United States is still not a development option for the next five years.
“Historically, we have leading positions in some countries like Vietnam. We are not looking to become market leader but, more and more, we are able to take some leadership positions with good clients.”
Hervé Nessi, CCR Re
Asia Pacific
Though it does not plan to open an office in the region in the next five years, CCR Re is looking to broaden and deepen its relationships in the market – one which it claims to know quite well.
In 2023, Asian business represented 17% of its global book.
CCR RE is active in both L&H and P&C, in all the major Asian markets from Japan to Korea, China, Taiwan and India, as well as in the South-East Asian markets.
Its main markets are Japan, China and India.
Elaborating on the reinsurer’s strategy in the region, Nessi said: “Historically, we have leading positions in some countries like Vietnam. We are not looking to become market leader but, more and more, we are able to take some leadership positions with good clients.”
“We are following our strategy to broaden our relationship with our best clients across multiple countries. For example, we underwrite in Laos and Cambodia subsidiaries of good clients for whom we have leadership positions elsewhere.”
For further growth in P&C, it is looking to improve its position in India, China, Hong Kong, Thailand, and Indonesia.
As for specialty lines, it is mainly targeting financial lines, energy and general aviation in China and India.
1.1 renewals
Talking about the expectations for the upcoming renewals, they are campaigning for further hardening renewals, but softer than last year.
“For years, we have been speaking out that the sector needs stability and serenity. We must stop extreme ups and downs on rates that are very targeted just on clients that have had losses. We all have to strive for moderate but constant increases.” Nessi said.
Some markets like Korea are “underperforming for too long” because of an exceptional series of fire claims, Nessi said. “They still need clear improvements not only on the price but also on the conditions.”
CCR RE has regularly contributed to improving discipline and conditions in the countries of the region.
In the past, after the floods in Thailand, it was behind the widespread use of event limits in proportional property treaties. “We intend to continue this work because we believe there is still room to lower some of these limits to more reasonable levels” noted Nessi.
For years, it has also been working with its partners to include co-insurance clauses in property treaties.
Could you give us an overview of Aon’s Strategy and Technology Group’s (STG) operations in Asia Pacific?
In Asia, our STG hubs are predominantly in Singapore and Sydney, Australia, but this is just the beginning – we already have plans to grow our capabilities in several other countries, driven by client demand and our own goals to ensure that all of our clients have regional and global access to Aon’s solutions and services.
The teams that we have at the moment are commercial lines, reinsurance and personal lines focused. With our expansion into other areas, we anticipate that there will be more of a life focus on the business, again aligning to the needs of clients and markets.
Our STG team globally has grown out of, and far beyond what was Aon’s Inpoint business, where we were successful for a number of years. We’re consolidating the former solutions and services, and adding many more from within and outside the business, to expand and develop STG.
In Asia, our three core areas of service delivery are in strategy consulting; finance; and actuarial consulting and technology solutions.
Strategy consulting is the first pillar, and it involves advising companies on areas such as market entry and exit, and optimising capital. For example, assisting companies with entering lines of business and new markets, or exiting or transferring out of a business, which in terms of strategy can all be considered organically, or in terms of M&A.
The second pillar is financial and actuarial consulting, where we deliver services including appointed actuary work, IFRS17 implementation projects, and finance transformation. This is a new function that we launched in the region, and we’ve built new capabilities and hired senior people in Asia to lead this area.
The third pillar is our technology business, which is largely advanced software platforms. We provide complex modelling software that are insurance-specific, such as pricing software, reserving software, cash flow projection on the life side, capital modelling and catastrophe modelling.
Since your recent launch in APAC, how is your business evolving in the region?
Some of the projects on which we’ve been working recently, especially because our natural brand is around commercial lines and reinsurance, are with reinsurers or commercial insurers. More broadly, in Asia our business is split fairly evenly between reinsurers, commercial lines insurers, and personal lines insurers.
Even though we launched our financial and actuarial consulting capabilities only this year, we’re already hiring appointed actuary roles in Singapore, and we’ve been managing extensive IFRS17 work – from small regional reinsurers to the big multinationals, and the inbounds, where their local teams need support.
Across APAC, the markets are significantly different in terms of maturity, complexity and price points. As a result, our delivery of solutions will vary depending on the region. For instance, in the smaller regional markets, we provide technology solutions as software-as-a-service and solution-as-a-service, which means the insurers submit their data and we use our own systems to provide the outputs to them, especially around reporting-as-a-service for areas such as IFRS17.
What are some of the trends you are seeing in the region in light of the hard market?
Because of the nature of the hard reinsurance market, we’re seeing clients wanting to retain more risk, and the limited availability of capacity is driving the inception of captives. We are assisting both with captive creation and captive management, as well as a wider range of further services around access to capital and capital optimization.
We are also establishing internal reinsurance vehicles for clients, which act as a mechanism to create internal intergroup retrocessions within a single unit. This structure enables blocks of business to be transferred into the market, allowing the client to benefit from better leverage, better structure and better control.
We’ve created such a structure for clients across the region, including in Japan and India.
Looking forward, what are some of the emerging business areas for the industry in the region?
Health and SMEs have been a big focus for insurers in the region for a while now. Health is an area in which everybody has wanted to participate for the past six years, but there is plenty of room for improvement. Early entrants made good profits, and so everybody wanted to join this line of business, with mixed success. We therefore advise companies on how to expand in this area and across the region, which is important, as this business line is very country-specific.
Many insurers aren’t comfortable with the health model, because it sits between life and general insurance. We provide advice on how to reserve, how to price, and how to assimilate health into a wider portfolio. So, we help clients to shape better business decisions, navigate the volatility they may encounter, and generate a clear lens on profitability. Ultimately, we try to help them build a line of business that is sustainable and resilient.
In terms of SMEs, the SME sector has been attractive for a long time, but again with mixed results, so we advise on, for example, trends and strategies around market entry, on both the life and general insurance sides, where certain insurers might be looking to enter the wider South-East Asia or Africa markets.
These two examples highlight just two of the many opportunities for insurers and reinsurers in Asia Pacific, and that it sometimes requires just a little guidance and direction from a third party to build a successful long-term business.
This is a sponsored feature.
Specialist insurer Beazley is looking to add more depth to its Asia Pacific teams as it builds on its product diversification strategy in the region.
“What we’ve done over the past four to five years is to diversify our book of business,” said Lucien Mounier Head of Asia Pacific – Beazley. “We’re at a stage where we want all our teams to grow together incrementally, and the best way of doing that is by adding depth to our team.”
Beazley’s Asia Pac hub based in Singapore, has been launching new lines of business in Asia over the past few years, especially in the financial lines and casualty space. This diversification with a specialist focus has paid dividends, said Mounier.
“We’re now at a point where we want to keep focusing on growing what we know we are good at, which is the specialties that we’ve invested in,” he added.
Two of the areas that the (re)insurer is keen on expanding is its cyber team and its property business.
“We have doubled our cyber team this year and are in the process of adding a cyber services manager to provide incident response services. We’re also looking to expand our property offering – and add more people to the team so that we can write a bigger book of property business.”
Mounier said that the market for cyber is maturing in this region, and there’s increasing opportunity.
“We anticipate our regional cyber book will grow by approximately 50% this year, and cyber will be one of the top contributors to our growth in 2024. We want to have the infrastructure to support that growth and in the medium to long term, as it’s only going to go in one direction,” he said.
On the property treaty side, Beazley expects to grow it organically by expanding relationships with core clients. The treaty book is about 10 to 15% of what it does overall in the region and that will see “incremental rather than explosive growth.”
“We anticipate our regional cyber book will grow by approximately 50% this year, and cyber will be one of the top contributors to our growth in 2024. We want to have the infrastructure to support that growth and in the medium to long term, as it's only going to go in one direction.”
Lucien Mounier, Beazley
“The property market, whether it’s on the treaty or on the fac side, is becoming increasingly complex. Because of that, it has come back into our wheelhouse, and we have the appetite to grow our property business,” he pointed out.
Beazley’s Asia Pacific book today is about 60% financial lines, casualty and cyber and the other 40% is first-party risks across property, marine, political violence and political risks, Mounier said.
In financial and professional lines the region has seen a softening in D&O lines and a fall in demand on the transaction liability side, however, Mounier is confident that Beazley’s track record in the region and investment will pay dividends.
“We are looking to innovate, recognise market trends and adapt or release new products that make sense for the market – such as our new private equity portfolio liability policy and multifamily office liability product suite that we launched recently,” he said.
Meanwhile, it is also looking to build its global programs capability in the region. “We’re maturing in this space and what we hope our global program capability will be able to do for us is to position us to write more primary business,” he added.
Regional growth
The (re)insurer trades actively across 12 countries in Asia Pacific, using what it calls a “hub model” of servicing all these markets from Singapore, where it now has 53 people.
“The market in most regions of APAC is happy to be serviced via Singapore, and we leverage the team that we have built up. So, we would need a compelling argument from a specific market that only wants to be serviced locally, for us to change our current model,” he added.
“Overall, we anticipate that 2024 should be a strong year for growth. I don’t see rates going back up in some of the areas that we operate in like D&O. Obviously, there are currently strong rate increases in property, and cyber rates to some extent are flattening, and financial lines and casualty are lowering a bit.
“Will we see an overall rate increase in Asia for our portfolio in the next year? Hard to say, but in terms of pure growth, I expect that we will see the book grow in the range of 20%,” Mounier said.
The carrier’s two challenges in the region, however, are distribution and talent.
“Our game is specialist insurance and we concentrate a lot of expertise in the team but from a distribution perspective, in regions where we are not licensed to write business in we need local insurer partners to push some of our new solutions,” he said.
“Talent is still a challenge,” Mounier said, “We’re also focusing on building out the local talent pool and bringing in and attracting new people to the industry. That could be young grads, or it could be people who are looking for a career switch.”
InsuranceAsia News (IAN) recently caught up with Stuart Beatty, APAC chief executive for global reinsurance broker Howden Tiger, before the Singapore International Reinsurance Conference (SIRC) 2023. Beatty is based in Sydney, Australia.
Howden Tiger was formed through a combination of Howden Re and TigerRisk – after London-headquartered parent Howden bought TigerRisk. The deal completed in January 2023 and helped create the fourth largest reinsurance broker in the world.
IAN: What are some of the key market themes you have been seeing in APAC this year and what do you think will be on the market’s mind in 2024?
Beatty: The key market theme we are observing for 2024 is a continuation of terms and conditions for reinsurance programs, as opposed to 12 months ago, where the predominant narrative was dominated by significant increases in both retention and reinsurance premium costs.
Another noteworthy theme centres on the fact that the majority of carriers are focusing on expanding and diversifying their portfolios over the near term. While the specific strategies employed may vary from one carrier to another, there is a significant growth potential in the Asia Pacific region, whether it be through product or a geographic focus.
IAN: Where do you see opportunities for reinsurance brokers to add value to P&C insurers in the region?
Beatty: Reinsurance brokers play a crucial role in adding value to Property and Casualty (P&C) insurers in the APAC region, predominantly around enabling global reach to reinsurance capital markets and partners. This is particularly relevant when market conditions are tight, as they presently are.
Maintaining strong existing relationships with reinsurance partners is vital, and it is equally important to introduce new partners to P&C carriers. That is very much a two-way relationship development process and has to be strategically managed well before any programs are taken to the market.
IAN: What is Howden Tiger’s APAC strategy for 2024 and the upcoming 1.1 renewals?
Beatty: Reinsurance brokers play a crucial role in adding value to Property and Casualty(P&C) insurers in the APAC region, predominantly around enabling global reach toreinsurance capital markets and partners. This is particularly relevant when market conditionsare tight, as they presently are.
As a globally connected business, we aim to leverage our extensive experience, resources, and data to inform discussions with clients regarding placement, product initiatives and overall growth strategies.
“Reinsurance brokers play a crucial role in adding value to Property and Casualty (P&C) insurers in the APAC region, predominantly around enabling global reach to reinsurance capital markets and partners. This is particularly relevant when market conditions are tight, as they presently are.”
Stuart Beatty, Howden Tiger
IAN: What are you most looking forward to at SIRC and what is your one piece of advice to get through the conference?
Beatty: We are looking forward to in person discussions with both clients and Reinsurance carriers — something we have all missed during the Covid era. The SIRC is an excellent platform that brings a variety of insurance professional together to enjoy focused conversations. The challenge is to manage all the appointments we want to have but also leave enough space for inevitable new contacts and opportunities that will emerge.