Seeking growth through partnership
Sompo International Singapore branch chief executive René Lamer talks about the organisation and its regional operations 18 months after its acquisition of Endurance.
With increasing consolidation, many reinsurers in the region are under pressure, especially with capacity still plentiful. However, beyond the available capacity, success stems from having meaningful partnerships with clients across a broad range of tailored products, said Sompo International Singapore branch chief executive René Lamer, who has observed a rising trend toward more significant partnerships between reinsurers and their clients.
“It’s not necessarily seeking growth just because the Asia-Pacific market is growing, but really growth through strategic relationships,” he said, in the lead up to the SIRC, where Sompo International (SI) is on the lookout for new opportunities. “The companies that have the desire, expertise and capability to grow these relationships will succeed.”
Growth opportunities in Asia-Pacific
Mr Lamer heads SI’s Singapore office, which serves as the regional reinsurance hub for Asia-Pacific from North Asia including Japan down to Oceania. And the region is growing in SI’s global book of business. The largest markets, as one would expect, are China, Japan and Australia, with agriculture, property and CAT the dominant lines of business. He noted, however, that CAT, property and marine are not growing as fast as other burgeoning opportunities in the region; namely casualty, professional lines (D&O, E&O), financial institutions, credit and surety and cyber.
“In some parts of Asia, the casualty product has been slow to develop but there’s definitely a growing need as financial markets pick up momentum,” said Mr Lamer. Cyber is another area that has everyone’s attention, and products need to be developed specifically for each insured’s needs. “While this is happening, there’s still some very broad policy wordings being issued that could lead to unexpected losses and accumulations.” Tailored solutions to local needs Another strong growth trend in AsiaPacific is in agriculture, as existing regions continue to expand and new regions look to develop products. To meet the global and local market needs, SI launched AgriSompo last October, an integrated platform that offers agricultural solutions tailored to local market needs, leveraging shared expertise and technology from SI’s insurance, reinsurance and weather teams.
Products include protection against yield and revenue shortfalls from single or multiple perils. AgriSompo also draws on Sompo Global Weather’s innovative pricing system and expertise to offer additional customised weather driven products that are delivered on a global basis as either derivatives or (re)insurance products.
Building on AgriSompo, SI recently introduced SomPro, a global financial and professional lines platform that similarly leverages expertise from both insurance and reinsurance teams to provide tailored solutions to clients.
Technology and transformation
When asked about technology and the potential impact on the way the reinsurance market conducts business today, Mr Lamer said, “While there is certainly a buzz in the air regarding innovation, I think it is also good to remember that the basic reinsurance product has been around for a while, and has proven to work well in the risk transfer space. That being said, there is always a better way of doing things. We need to be thinking of how our world and our market is changing and what that change means for our clients. We need to be one step ahead.
“Pairing traditional reinsurance with broader access to the capital markets has also proven successful. Through Blue Water Re, our special purpose insurer, we provide fully collateralised or fronted reinsurance to the global marketplace. Our ILS strategy, aligned with or own, is to give investors access to our market leading reinsurance businesses including agriculture, CAT and weather.”
While Mr Lamer finds the reinsurance market generally challenging, with rating environments getting thinner and returns on investment ‘quite modest’, SI has weathered these storms with a disciplined underwriting approach, experienced underwriting teams operating in key markets worldwide, a wide range of reinsurance products, and a depth of understanding of local markets and cultures. And pricing should improve further with the recent spate of Nat CAT in Asia. “Rates have come off quite a bit in the past few years and now we expect to see an increase in renewals in Japan and in China,” he said.
Are there any regulatory changes which may help business? “Regulators need to be mindful about how protectionist their policies are simply because the purpose of reinsurance is to spread risk globally, so that when you have large events, whether they are manmade or Nat CAT, that the loss is not largely retained within the local market.”
Mr Lamer acknowledged this by highlighting as a positive example the New Zealand earthquakes, where most of the risk was borne by global reinsurers and enabled the country to cope with the disaster.
SI’s vision is to build the first truly global integrated insurance and reinsurance business to meet the evolving needs of the global (re)insurance market. SI has assumed the management of all 45 operating entities outside of Japan spanning 32 countries and will fully integrate these operations by 2020. “With our geographic spread, broad product offerings and global platforms like AgriSompo and SomPro, we can offer our clients the service and expertise they need,” Mr Lamer said.
Overall, it has been a very good year for SI, said Mr Lamer. “Discussions with our brokers and clients have been well received and with an A+ rating and a strong balance sheet, we believe that we are well positioned for future success.”