Qatar Re grows on attractive risk pools despite shedding business in January renewals
Qatar Re has walked away from unprofitable business but was able to find attractive replacement, allowing the Bermuda-based reinsurer to grow its gross written premiums by 8.1 percent to $1.25 billion in 2016.
“Whilst it has been necessary to withdraw from certain underpriced business, we were successful in replacing it with more attractive risks, primarily emanating from highly specialist reinsurance transactions and bespoke support of insurance entrepreneurs,” said CEO Gunther Saacke.
“Qatar Re is not a market tracking reinsurer, meaning that we are well placed to weather the effects of irrational price competition, supported by our growing and globally diversified multi-line franchise.”
As the price adequacy of traditional 'volatility' business continued to deteriorate in 2016, Qatar Re has increased its focus on structured reinsurance and the more predictable levels of profitability it generates.
Qatar Re's net income grew by 52.3 percent to $38.0 million in 2016.
During the January 2017 renewals, the company has reduced its participation in several lines of treaty business, including marine and energy, non-US property catastrophe, and Middle East property/casualty. In contrast, Qatar Re increased its participation in UK motor structured deals, international property facultative, and US property per risk. These lines of business continue to demonstrate attractive returns, according to Qatar Re. Certain new specialist lines of business, such as residual value insurance and US casualty, are also expected to contribute to the company’s future growth, albeit at modest levels.
Qatar Re’s renewal performance demonstrates that the company is willing to pass on underpriced business as it pursues new opportunities associated with its increasing scale, diverse capabilities and global reach, it said in a press release.
Going forward, however, the ongoing deterioration of global reinsurance market trading conditions will place a growing premium on Qatar Re’s entrepreneurial and individualised client approach. The company will continue to seek and capture project-based opportunities with insurance entrepreneurs and innovators who require bespoke solvency relief and capital management solutions. Depending on market conditions, regulatory and legislative changes, and the continued availability of attractive project-based opportunities, Qatar Re’s short-term outlook remains cautiously optimistic.
Qatar Re has been working on adapting its product offering and operational structure to capture growth.
A combination of traditional catastrophe and solvency relief products, backed by Qatar Re’s security and expertise, has continued to prove popular among US cedants. Qatar Re has also strengthened its proximity to its clients in the Middle East, Africa and Asia by establishing branch offices in the Dubai International Financial Centre and Singapore. In Dubai, the arrival of a new underwriting team and a refocus in strategy has meant that Qatar Re is now in a position to offer lead capacity in commercial lines for a number of major international programmes.
During 2016, Qatar Re has consolidated its head office presence in Bermuda by further strengthening its risk, compliance, and underwriting functions. The company is also now seeing the benefits of operating from a Solvency II equivalent regulatory regime and the improved access that Bermuda offers to the North American markets, according to the press release.
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