Casualty drives growth at Tokio Millennium Re; targets Europe
Tokio Millennium Re, the reinsurance subsidiary of Tokio Marine, posted solid growth and profits in 2013 driven by its expansion into non-catastrophe business. Its CEO warned of a tough year ahead for reinsurance but said its recent move to Zurich should open doors in Europe.
The company’s 2013 gross written premiums were $897.2 million compared with $829.3 million in 2012 – an increase of 8 percent. It said this also reflected its efforts to rebalance and diversify its portfolio by expanding the non-catastrophe side of its business.
“Our top line growth in 2013 was driven by our non-catastrophe book, which includes US excess casualty, non-standard auto and specialty casualty. In addition, our geographic diversification through our continental Europe and Australia operations aided our top line growth,” the company said.
It made a net profit of $140 million in 2013 compared with $123.6 million in 2012. Its combined ratio was 83 percent and its return on average shareholder’s equity was 11.6 percent.
“We achieved these results in what continues to be a challenging environment for the reinsurance industry. The market experienced further softening as increased capacity forced reinsurance rates down, while at the same time interest rates remained at historically low levels. It is often said that the better companies distinguish themselves in these conditions. At Tokio Millennium Re, we believe our analytical and technical approach to risk selection will prove us to be among those better companies,” the business said.
Tatsuhiko Hoshina, group chief executive of Tokio Millennium Re, also commented on the company’s recent shift of its global headquarters from Bermuda to Zurich, Switzerland. He said that the business is now focused on building a client base in Europe but he acknowledged that breaking down long-term historic relationships would be tough.
“We see great potential in the European market, but in the past, that potential has been difficult to capitalise on. Traditionally, European companies are very loyal to their reinsurers and prefer to give their business to those who are based in Europe. This is particularly true of small to mid-sized companies – Tokio Millennium Re’s target market.
“The decision to move our headquarters to Switzerland supports our ongoing European marketing efforts. We strive to develop long term relationships with our clients, and believe that being closer to clients, with our head office in Europe, will enable us to do exactly that,” he said.
He also said the Zurich move would make it easier to expand into the US market. He reiterated that he anticipates that the company will have a US presence by the end of the first half of 2014.
