3 November 2014 News

TMR plots Asia expansion as it grows global footprint

Tokio Millennium Re (TMR) is planning a further expansion of its presence in the Asian markets to capitalise on the “enormous potential” of the region, Stephan Ruoff, currently deputy CEO and chief underwriting officer of TMR, who will take the reins of the business next April as CEO, told EAIC Today.

The company has a strategy of establishing a physical presence in markets where it has not previously operated and recruiting talented individuals to help it make inroads into new markets. The company’s most recent expansion using this model was in the US earlier this year.

Asia is now high up the company’s agenda, Ruoff said. Its strategy includes building upon TMR’s presence in the Asia Pacific market through sister company, TMR UK. Last year, this unit assumed the responsibility for the renewal of an existing portfolio of Asian market reinsurance originally written by Tokio Marine Global Re Asia.

“We view the Asia Pacific market as one with enormous potential in the long run and, therefore, further expansion of TMR’s presence in the region is an integral part of our overall global strategy,” Ruoff said.

He added: “We believe that our Japanese roots and, particularly, Tokio Marine Group’s financial strength, brand and reputation, are very important assets for us as we continue to expand TMR’s presence in the Asia Pacific region. Our excellent ratings and track record since 2000 set us apart from our competitors and position us well to build upon our already strong relationships with Asian clients, giving us a great insight to our clients’ and the market’s needs.”

The company has shifted its footprint in recent years. It opened an office in Australia in 2011 and completed a redomestication to Switzerland in 2013. Ruoff said these moves reflect the ethos of the company’s mission statement, which is: ‘We are innovative, creating new opportunities, products and markets’.

He said: “Our expansion into Australia in 2010 and our redomestication from Bermuda to Switzerland last year are two examples supporting our mission and overall strategy of global expansion and line of business diversification.

“In addition, the redomestication to Switzerland was an essential step in achieving TMR’s long-term business plan for further expansion, including the establishment of a US branch earlier this year, while maximising capital efficiency.”

He added that the evolution of the company can also be seen in the way it has transformed from being a monoline catastrophe reinsurer in Bermuda into a diversified, global reinsurer.

“Our ambition continues to be further global expansion. This is very much a part of TMR’s DNA. We continually evaluate the market and consider opportunities for growth in new lines and territories on a global basis,” he said.

Ruoff admitted there are challenges around operating in the region, including low levels of insurance penetration in most Asian countries outside of motor insurance and the fact that pricing does not always reflect the actual exposure of the risks.

“This is slowly changing and we believe that such change represents opportunities for a reinsurer to provide the capital, expertise and product innovation to help in transforming the insurance and reinsurance markets in this region,” he said. “China and India are just two examples of countries in the Asia Pacific region with enormous potential to further develop their insurance and reinsurance markets.”

He believes the big talking points at EAIC this week are similar to those around other global markets. These include the softening reinsurance market and the influx of third party capital in the reinsurance space.

“However, in order to address such issues, we believe that the key for us is to demonstrate our long-term view and commitment to both the reinsurance market generally and to the Asia Pacific region,” Ruoff said.

“We also believe that it is those reinsurers that are able to develop strong, mutually beneficial partnerships by providing both traditional and ‘out of the box’ innovative solutions, who will be the ones to make a lasting impact in the Asia Pacific region.”

Ruoff added that the challenges facing TMR on the global stage are not that dissimilar to those in the Asian markets. They include the low interest rate environment, the influx of third party capital combined with the increased capital base of traditional reinsurers, the use of increasingly sophisticated modelling capabilities and the use of big data and technology to enhance risk evaluation and transfer.

“It’s certainly the most challenging market environment since the year 2000. There is probably not just one big challenge but, rather, different dynamics all coming together at this time,” Ruoff said.

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