Peak Re’s diversity woos European cedants

Although market conditions in Europe remain competitive and rates in many lines are soft, Hong Kong-based Peak Re has found cedants in Europe receptive to working with an Asian reinsurer because of the diversity it offers on their panels and its innovative approach.

That is what Franz Hahn, chief executive of Peak Re, told Baden-Baden Today, speaking in relation to its European expansion strategy.

The company recently opened a branch office in Zurich and last month appointed Jacques Burri, a former reinsurance manager with Zurich Insurance. He joined Railovy Boyer, its director of underwriting for Europe, who joined from PartnerRe in July.

Hahn said that as of June 2015, Peak Re wrote more than 25 percent of its premiums outside its core Asia-Pacific region. Europe is already its biggest non-Asian market with a share of about 18 percent of Peak Re’s global gross written premiums. While Asia will remain its core region, it is seeking a broader diversification, he said.

Its presence in Europe was boosted in January 2014 when Fosun, the biggest investor in Peak Re, acquired Fidelidade, one of the biggest insurers in Portugal, providing Peak Re with additional reinsurance opportunities.

This year, the bulk of the business it has added has been written with existing clients who allocated larger shares to the company.

“Our expansion in Europe reflects our cedants’ rising recognition and appreciation of Peak Re as a long-term oriented provider of multi-line solutions,” Hahn said.

While he admits market conditions are challenging, he also identifies specific reasons that cedants like working with Peak Re, and stresses that price is only one factor in negotiations.

“The market is highly competitive and rates are soft. However, price cannot be the guiding principle to determine the right moment for market entry,” he said. “Peak Re’s independent origin of capital instantly diversifies our cedants’ panels.

“Also, our distinct emerging markets expertise makes Peak Re an attractive partner for cedants in search of tailored, innovative solutions and swift service.”

The company’s move into Europe does not mean it is ignoring either its roots or opportunities in other parts of the world, however. Hahn says that opportunities in Asia-Pacific remain abundant.

“Asia-Pacific will remain a growth region, albeit at a slower pace. Underinsurance remains a persistent phenomenon as insurance penetration in key markets such as China or India is still at about half of the global average,” he said.

“As this gap continues to narrow, Peak Re with its strong expertise and experience in Asia is well positioned to benefit from this momentum. We will continue to enlarge our position by expanding into further lines of business such as life, but also by growing our position in credit & surety and agriculture.

“We are also targeting growth elsewhere and we are open to the possibility of acquisitions where the right opportunities arise,” he said.

Peak Re has already done some deals. In July, it acquired a 50 percent stake in NAGICO Holdings, a property/casualty insurer based in the Caribbean which, Hahn said, will provide Peak Re with attractive growth prospects in the region.

“NAGICO provides us with access to Caribbean nat cat exposure, a risk currently entirely uncorrelated with our Asia-Pacific nat cat exposure. In addition, growth in the Caribbean reduces our dependence on our Asia-Pacific growth markets,” he said.