Sirius’ Cramér Manhem on growth, pricing and nat cats

January 22 2020 by Andrew Tjaardstra

Monica Cramér Manhem, president global reinsurance and international specialty at Sirius Group, and managing director of Sirius International, discussed 2019’s storms, a fac team hiring in Singapore and where the market needs to improve in 2020.

InsuranceAsia News (IAN): 2019 was a difficult year for many reinsurers in Asia – how was it for Sirius?

Cramér Manhem: Sirius Group was not spared and like other reinsurers, we were affected by multiple weather related events in Asia. Japan has been hit by an unprecedented series of major typhoons over the past two years – Jebi and Trami in 2018 followed by Hagibis and Faxai in 2019.  Like most of our peers we were impacted by the loss creep from Jebi in the first quarter of 2019.

China is also a very important market for us and here losses that impact our portfolio are Typhoon Lekima and heavy rainfall in north-east Heilongjiang province which caused severe losses to crop insurance in 2019.

IAN: Sirius has taken on ACR’s fac team in Singapore, what is the thinking behind it?

Cramér Manhem: Through our Singapore office, Sirius Group has been providing treaty capacity in Asia, including lead capacity for property lines. We expanded into property facultative business two years ago to better service our local clients. This portfolio was previously written from our London office. After two years of local presence, our Singapore office is well placed to further expand its footprint in the facultative space.

The recent developments in the region saw a shortage in capacity as markets have pulled back their support and tightened underwriting controls which have helped push the market cycle upwards in the right direction.

The onboarding of a team of key facultative underwriters from Asia Capital Re (ACR) is an opportunity for Sirius to fast track our strategy to expand the property, engineering and aviation portfolios. The experienced and established underwriters coming from ACR will help to uplift Sirius’ book of business to the next level. The Singapore aviation team will support Sirius Group’s Zurich office diversification plans in Asia especially for general aviation business.

IAN: What are some of your key plans in Asia for 2020?

Cramér Manhem: Sirius Group has a globally diversified portfolio and Asia is an important and growing region for us. We recognised that there is great potential for growth in Asia with low insurance penetration. The higher frequency of weather-related events had increased risk awareness as well as demand for natural catastrophe protection in the region.

The global economy is anticipated to see signs of slowdown due to the ongoing US trade war with major economies and Eurozone politics. On the other hand, economies in the Asia region especially in South-East Asia are expected to remain resilient – driven mainly by increasing domestic consumption albeit potentially at a slower pace amid global uncertainties.

Sirius will continue to expand its treaty and facultative offerings in Asia. Underwriting focus is core to Sirius and we will not expand our top line at expense of our profitability. We remain focused on being a key player in excess of loss business and will seize opportunities to deploy more meaningful leading capacity especially for specific targeted clients.

Apart from the traditional property and marine classes, we are also strengthening our platform by better coordination across product lines and segments providing our clients with access to accident & health, casualty and credit & bond capacity written through Sirius Group’s London and Liege offices respectively.

The reinsurance market in Asia region remains heavily reliant on pro rata capacities. Performance of pro rata treaties in the region continues to deteriorate with no clear hardening of terms and conditions.

Sirius will write pro rata treaty business on a selective basis and continue with a client-differentiated approach in underwriting, providing consistent support for preferred clients with long standing favourable results.

IAN: In what area would you like to see reinsurance markets improve the most in Asia?

Cramér Manhem: We would like to see a more meaningful hardening of terms across the board in Asia in line with the developed markets like Europe and the US. Reinsurers should maintain underwriting discipline, minimise keen price competition and consider pricing for increased risk in the underlying exposure due to climate change and rapid urbanisation in the region.

We hope the increasing effects of climate change will bring about better risk awareness to primary players on the need for robust protection against natural catastrophe perils. It’s important for the market to close the pricing gap and ensure pricing adequacy when deploying capacities in cat exposed countries to ensure long term sustainable profit for the industry.

Renewals of Japanese programmes on April 1 2020 should see very significant upward pricing trends considering the higher frequency and severity of typhoon activities in recent years. Programmes for other claims free cat exposed countries in Asia should be priced adequately based on growth in the underlying exposures and increasingly severe weather conditions.

Trends have shown that major renewals in Asia are becoming later to complete largely due to the late submission of renewal information in recent years. It is important for the market to ensure timely submission of renewal data in order to provide sufficient time for underwriting assessment, and also there should be emphasis on improving the quality of data. This will enable the reinsurers to provide better service to the market.