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EAIC Today Day Three 2016

DAY 3 EAIC TODAY Friday October 14, 2016 What’s inside 4 SUCCESS IN ASIA DEPENDS ON BUILDING TRUST 4 ON-THE-GROUND CONTACT KEY TO SUCCESS IN MARINE MARKET 6 OVER-REGULATION POSES CHALLENGES FOR REGION 8 GROWTH AND PROFITABILITY CRITICAL IN CHANGE 10 QATAR RE GOES BACK TO BASICS IN ASIA 12 STARTUPS WILL CHANGE LANDSCAPE IN ASIA: S&P 14 SOLVENCY II MAY DRIVE CAPTIVES TO MOVE TO ASIA 15 UNDERDEVELOPED MARKETS WILL CATCH UP 16 INNOVATION AND TALENT KEY IN ASIAN MARKET 17 INSURERS MUST WORK TO CLOSE PROTECTION GAP 18 REINSURERS PLUNGE INTO INDIA SEEKING GROWTH 19 THE SURETY BOND MARKET IS GROWING IN CHINA Powered by: Weak economy triggers credit claims but Lloyd’s Asia boss remains bullish on potential The persisting economic uncertainty, which Kent Chaplin has hit some sectors particularly hard, is leading to an increase in credit claims on a scale not seen since the 2008 financial crisis, Kent Chaplin, chief executive officer, Lloyd’s Asia- Pacific, told EAIC Today. He noted two recent examples of large companies getting into difficulties, which could lead to more claims. Swiber, the Singapore-based offshore oil and gas services group, hit financial problems in recent months partly due to low oil prices; and Hanjin, South Korea’s biggest shipping company, sought bankruptcy in September leaving hundreds of ships and their crew stranded at sea. “In Singapore, Swiber is a prime example of difficulties in the oil and gas sector, as is Hanjin in South Korea for the transportation industry,” Chaplin said. “At Lloyd’s there has already been a steady rise in claims among our credit risk portfolio in recent years. As commodity prices have fallen, most notably in oil, aluminium and steel, there has been a material increase in the number of claims notified to the market in trade credit insurance not seen since the 2008 financial crisis.” Since 2013, the average number of new claims advised under the credit risk code has oversight and excess capacity putting pressure on pricing,” he said. Opportunity ahead That said, the combination of low insurance penetration rates in many countries within the region and high risk exposures particularly from nat cats, (Continued top of page 2) Launch of Nine Merchants Re shows ambition of investors A key theme for discussions at this year’s EAIC is the increasingly outward-looking attitude of the Asian re/insurance industry, Aon Benfield’s Asia-Pacific CEO Malcolm Steingold told EAIC Today. “Globalisation is a theme, and related to that is the latest potential reinsurer on the horizon, Nine Merchants Re, the founders of which have had their capital confirmed at half a billion dollars,” he said. Nine Merchants Re was recently formed in increased by around 40 percent year on year. In the same period, the average value of claims paid by Lloyd’s has increased by around 70 percent year on year. More broadly, the market in Asia is facing similar pressures to those seen in other regions of the world, said Chaplin, who highlighted the wider pressures facing re/insurers. “We continue to see soft market conditions with low interest rates, increased regulatory Hong Kong by investment management company First Seafront Financial with initial capital of $500 million. The company has said it will operate a total return model with a focus on delivering efficient risk capital to clients by leveraging its shareholders’ asset management capabilities. It will initially underwrite treaty reinsurance emanating from Asia-Pacific with a focus on China and other developed markets such as Korea, Japan and Australia/New Zealand. It will also underwrite business emanating from the rest of the world for selected clients but it expects more than 60 percent of its portfolio to come from Asia-Pacific. “I expect there will be quite a bit of discussion around not only what its agenda will be but also about this as a reflection of what is happening in this part of world, where if people have the necessary expertise, they have the ability to raise half a billion dollars in China to support a global reinsurance strategy,” Steingold said. (Continued top of page 14) www.intelligentinsurer.com | www.bermudareinsurancemagazine.com DAY 3: Friday October 14 2016 | EAIC TODAY | 1


EAIC Today Day Three 2016
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