PartnerRe aims to double its market share in LatAm
Bermuda-based PartnerRe plans to double its market share in Latin America within the next three to five years, the head of Latin America Humberto Cabrera, told FIDES Today. A prerequisite for the expansion is that the growth is profitable, Cabrera noted.
At 2016-end, Latin America, the Caribbean and Africa represented 8 percent of PartnerRe’s gross premiums written of $5.36 billion.
In order to prepare for the expansion in Latin America, PartnerRe has reinforced its regional hub in Miami. It is investing in its capabilities, making appointments in both Miami and Brazil, in the casualty and cat businesses, while establishing the claims service in Miami to be closer to clients.
PartnerRe sees opportunities to grow the life and health business in Latin America, particularly in relation to private pension plans and the risks associated with a growing middle class. Driven by economic growth an expanding middle class is looking for risk management solutions, Cabrera said. In addition, risks associated to infrastructure projects will drive demand for reinsurance. Partner Re is optimistic about the growth potential in surety, construction, property, cat protection as well as marine, Cabrera said.
Growth in property/casualty may gain some additional traction as demand for reinsurance increases after hurricanes in the Caribbean and earthquakes in Mexico caused significant damage in the region. As a result of the significant nat cat losses in the third quarter, primary insurers are likely to buy additional cover to reduce future volatility, Cabrera suggested.
Latin America and the Caribbean have made a significant contribution to the third quarter nat cat losses which some observers believe could reach $100 billion, Cabrera noted. Insured losses originated in the Latin American and Caribbean region may range from $30 billion to $45 billion, according to some estimates, the majority of which is expected to be transferred to the reinsurance market.
PartnerRe itself expects overall combined catastrophe losses of approximately $475 million (pre-tax, net of retrocession and reinstatement premiums) from its exposure to hurricanes Harvey, Irma and Maria in the third quarter of 2017.
“The nat cat losses will affect the perception of the underlying risk that we are covering as well as the adequacy of the current market conditions,” Cabrera said.
Irrespective of the recent cat events, he says that the reinsurance market is in need of price correction. The cat retro market is likely to harden materially which will have an impact on reinsurance rates which will vary between loss affected and loss-free contracts.
Revisions in terms and conditions are also likely to be on the cards at renewals
“We are assessing every client individually and we are aiming to get back to our target margins,” Cabrera said.
“Overall, there are huge growth opportunities across all lines of business in Latin America."
Primary insurers are looking for solutions in several areas. Cedants are seeking to reduce the sizeable protection gap in the Latin American region, growing their businesses using innovative products and new distribution channels.
“Digital insurance products are a key component of cedants’ growth strategy to target specific groups and parts of the population,” Cabrera said. PartnerRe is, for example working with clients via a joint venture to explore insurance products targeting migrant workers who send back money to their families in their country of origin.
Cedants also see a need to optimise their capital usage. They are looking for reinsurers to navigate the different solvency requirements in the countries they operate. Cedants are also under pressure to become more efficient and streamline their processes as well as reduce their expense ratios to become more competitive, Cabrera said.
“Cedants in Latin America are looking for help from reinsurers to reduce their earnings volatility and expand their business,” Cabrera explained.
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