Reinsurance: a long-term view in APAC gaining ground
As climate change, geopolitics and inflation challenge the region, Kevin Bogardus of Everest Re says each APAC market must be assessed on its own merits.
Carrier clients in Asia-Pacific are becoming less interested in short-term opportunistic reinsurance buys, according to Kevin Bogardus, head of reinsurance in Singapore at Everest Re.
Bogardus explained that the reinsurer’s approach in Asia-Pacific is to go into each geographical market and assess who is a long-term, strategic partner and which companies are looking for a mutually beneficial relationship.
He said: “I’m starting to hear more of this longer-term thinking from clients as well, rather than short-term opportunistic reinsurance buys, which is a profit play by the buyer rather than a capital support partnership where both sides enjoy stability in a relationship.
“Profitability on both sides is something we’re aiming for and I think it’s achievable in all markets.”
“The Everest Re Asia-Pacific team looks for companies with which we share a like-mindedness, where we think we can do deals that work, whether this is in Australia, China, India, Korea, Taiwan, or Vietnam, for example.”
Across Asia-Pacific, Everest is looking for partners with whom to establish a deep relationship, and from this the company would look to broaden the deep relationship further, a strategy that Bogardus likened to growing strong tree roots.
“This will give us stability, so when at some point property prices start to soften, we don’t have to pull out from the deal—we can ride through the changes because of the relationship.”
The thinking behind this is that the reinsurer wants to see “less volatility in the ups and downs of a relationship” and “to stand by our partners”, to ensure both parties are in a more favourable position over time, Bogardus explained.
APAC is not a monolith
Climate change continues to be a hot topic in the Asia-Pacific region. “Climate change is happening at a faster pace than anybody had anticipated, with increased frequency and increased severity,” Bogardus commented.
“If you think about Asia-Pacific over this year, I would say most companies and most markets are profitable, despite the black rainstorm warning issued in Hong Kong in September this year, when the densely populated city was flooded by the heaviest rainfall in almost 140 years, as well as numerous typhoons that have hit North East Asia, China, Taiwan, Japan, and cyclones and flooding in New Zealand.
“Any one of these events is significant weather activity, and can be an unmodelled secondary peril,” he added.
In addition to the natural catastrophe and climate change challenges that re/insurers in the region face, Bogardus pointed to challenges associated with changing geopolitics, deglobalisation, and supply chains, as well as inflation moving at different paces in different countries.
“It’s challenging, and that’s why we have to look at each market individually. For example, in Japan some people are looking for inflation after all these years of deflation. Other countries, such as China, are potentially facing deflation, whereas still others in Asia are faced with inflation of varying degrees.
“So Asia-Pacific as a region is not monolithic,” he concluded.
