Markel targets niche products shielded from competition
Markel wants to develop deeper partnerships with local cedants across a number of Asian jurisdictions as it looks to grow its bottom line profitably, Matt Cannock, principal officer and managing director of Markel Asia-Pacific, told SIRC Today.
Cannock said that Markel is looking to develop specialty products and more complex products in markets where traditionally there has not been a huge amount of expertise.
Market conditions are challenging across Asia-Pacific, but Markel’s focus on speciality and niche business allows it a more long-term view of the business.
“Nothing is immune to market forces, obviously, but the niche opportunities we look at do insulate us somewhat from the pure competition of simple products over which people compete on price,” Cannock said.
He added that Markel is currently in the process of opening an office in India where it will offer products such as liability and property packages for ports and terminals, along with trade credit.
The macroeconomics of India are compelling, with a stable progressive government, Cannock said.
“It’s so important that as reinsurers we understand the markets that we are in, and understand the local businesses and the local exposures,” said Cannock. “Engagement is key in this market, and we need to understand the market rather than impose what we want to do on them.”
Since January 2016 Markel has started offering a local solution for Chinese insurers seeking to purchase treaty and facultative reinsurance. Capacity is provided by Markel’s Syndicate 3000 at Lloyd’s and is written through the Lloyd’s China platform.
In terms of market conditions in Asia-Pacific, Cannock suggests there is still a lot of “wait and see” with regard to what effect losses such as the US hurricanes and Californian wildfires in the third quarter will have on rates.
“Traditionally buyers will turn around and say ‘they are not our losses’,” he said. “Previously that has been an excuse it has accepted. Will it be different this time? My gut feeling is that it will.”
Cannock noted that price erosion over the years seems to be continual, and that brokers are seeing a limited value in taking money out of the market and reducing premiums.
“We are seeing a lot more pushback after third quarter results; we cannot afford to keep giving money away,” he said.
“We are not going to give any more reductions. When the brokers hear that message from two or three carriers, we start to see some change in the market.”
Against this backdrop, Cannock still believes there is huge growth potential in Asia, but market players but must look to offer genuine solutions that add value.
“If you offer a load of treaty capacity to property, you are not really adding anything,” he concluded.
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