Taking the long view: Malaysian Re CEO weighs Europe and specialist growth

What does long-term growth look like when the market is softening? Malaysian Re’s CEO sits down with Baden-Baden Today to explain how it is building capability and deepening its presence in Europe.

Key points:
Structured and fac offer opportunity
Expertise key to retaining risk
Underwriting discipline is key

Malaysian Re is taking a long-term view of its ongoing expansion in Europe, focusing on deeper relationships and the capabilities it wants to build through the cycle rather than allowing the current soft market to dictate the direction of the business.

“When we transact business, it has to be about long-term solutions rather than short-term gains,” president and chief executive officer Ahmad Noor Azhari Abdul Manaf told Baden-Baden Today. “We need to make sure the business works for both parties over the longer term.”

The reinsurer has steadily built its European presence in recent years, and now sees structured solutions, facultative reinsurance and specialist lines as areas where Malaysian Re can grow.

“We have done well with structured solutions across ASEAN and Asia, and we see an opportunity to take that experience further west,” he said.

“Facultative is another area where we can do more. We have been speaking with clients and the demand is there.”

That long-term view is also shaping how Malaysian Re is navigating the softer market. Ahmad Noor Azhari said rate reductions have become more pronounced this year, but the company is looking closely at terms and conditions rather than judging business on price alone.

“Pricing is pricing, but we look closely at the terms and conditions,” he said. “If those remain stable, pricing is a conversation we can have with clients. We are looking at the relationship over several years, not just one particular year.”

Broader capability

Its international push is being supported by a wider investment in specialist underwriting capability.

Malaysian Re is strengthening expertise in cyber, aviation and space, trade credit and surety, energy and health, including by bringing in talent from outside Malaysia and, where necessary, outside the wider ASEAN region.

Much of that specialist business has historically been placed with larger international markets. Ahmad Noor Azhari wants more of it to be retained within the region over time, but says that will depend on building the technical knowledge to underwrite those risks properly.

“We have been building our specialist teams and will continue to strengthen them,” he said. “We should not be shy about bringing in expertise where we need it.”

Capacity itself, he argued, is only part of the equation and “can often be accessed through retrocession or partnerships. The harder part is developing the knowledge and underwriting capability.”

The same emphasis on expertise shapes Ahmad Noor Azhari’s view of ASEAN as a growth market for international reinsurers. The region cannot be approached as a single market, he said, because regulation, catastrophe exposure, insurance penetration and market maturity vary significantly from country to country.

Malaysia, he said, has a very different catastrophe profile from the Philippines, while Thailand and Vietnam offer large populations, lower insurance penetration and different opportunities for product development.

“You need to understand how individual markets operate, how people are likely to react and where opportunities can be created,” he said. “That is something international markets need to appreciate when looking at Asia.”

Specialist reach

Retakaful is another established area of expertise for Malaysian Re, but Ahmad Noor Azhari sees scope to broaden the business beyond its traditional concentration in motor and property.

“What we are trying to do is take some of the specialist knowledge we have developed across the wider reinsurance business and apply it more deeply within retakaful as well,” he said.

“If retakaful is going to become more sizeable and attractive, the offering has to develop beyond those traditional areas.”

He sees opportunities not only in Malaysia and Indonesia but also across the Middle East, including Saudi Arabia and the UAE, with interest also emerging in markets outside the traditional base.

Ahmad Noor Azhari said softer conditions should not stop reinsurers pursuing opportunities where the underwriting still makes sense.

“The market may not always be where you would ideally like it to be, but markets move through cycles,” he said. “You need to keep an open mind about how you structure a programme and provide a solution to the client.”

Buyers currently have greater influence over terms, he added, but that does not change the need to think beyond the next renewal.

“Underwriting discipline still has to be maintained. Reinsurance is a long-term business and we need to make sure the decisions we take today remain sustainable over time.”

Ahmad Noor Azhari Abdul Manaf is president and chief executive officer of Malaysian Re. He can be contacted at: arie@malaysian-re.com.my

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