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EAIC Today Day Three 2016

News FRIDAY 14.10.16 Launch of Nine Merchants Re shows ambition (Continued from bottom of page 1) may cause them solvency issues in future.” “Like Peak Re, Nine Merchants Re from day One of the biggest areas of growth for one will be looking to write a global reinsurance Aon Benfield has been the development of book. This part of the world is no longer its new software, PathWise, which enables life inwardly focused but is looking beyond the companies to assess these embedded liabilities. opportunities within the Asia-Pacific region.” “Prior to PathWise this was quite difficult for He also expects to see discussion around them: you had a huge amount of data, and you the related topic of M&A activity, in the light could use this to understand your embedded of Sompo Canopius’ recent acquisition of liability only on a quarterly or yearly or half-yearly Endurance. basis,” Steingold explained. In terms of reinsurance business in the “With PathWise, life insurers are able to region, Steingold sees all geographical areas understand this on a real-time basis. That’s a as offering growth opportunities, and warns huge change.” against ignoring the potential still present in Malcolm Steingold Growth also comes from taking a broader mature markets. view of the opportunities available within the “The region comprises both mature and rest of the globe, in terms of perils and the pace market, said Steingold. developing markets and some of our biggest of development,” Steingold said. “Reinsurers and reinsurance brokers are growth comes from mature markets—so don’t Aon Benfield has seen growth in certain key used to annuity business—treaties renewing assume that just because a market in the region areas in the region, especially agriculture in every year. We are finding a lot of potential in is mature there is no growth opportunity. I China, India, Thailand and Vietnam. non-recurring opportunities, such as advising think sometimes that is a misguided approach Others are credit and surety, and life on capital management or M&A; we have a to strategy.” reinsurance—a market that is starting to very successful M&A practice based in Hong From a reinsurance perspective he believes become dynamic as more reinsurers show an Kong.” companies are reaping the benefits of an interest, said Steingold. Looking to the future, Steingold is proud of increasingly client-focused approach. “In the past there was a very small club of the talent Aon Benfield has brought into the “There is a lot more listening to clients and the large reinsurers dealing directly with life industry and nurtured. He sees this talent as a understanding what they need rather than companies; that dynamic is changing quite vital ingredient for future growth. trying to impose vanilla reinsurance products considerably. There is a lot of opportunity “My focus is very much on our talent— on them. This is important because the region within life companies that have embedded developing young people within the group to sometimes has very different needs from the liability in the form of long term liabilities that be future leaders.” n Solvency II may drive captives to move to Asia Companies with captives based in Europe are likely to consider redomiciling them to Asia, due to the higher capital charges they will incur under Solvency II, according to a report from Marsh, Asia Insurance Market Report 2016. The captives affected by Solvency II, which generally only write the risk of their associated group and subsidiaries, may relocate to obtain a more appropriate regulatory structure for the risks they assume. Marsh suggested this move would be a particularly attractive option for “reinsurance” captives that already have fronting arrangements in place for writing European-based risk. Singapore, which is considered the hub for Asian captives, has experienced growth with the number of captives increasing by 6 percent from 64 in 2014 to 68 in 2015. “Captives have also been affected by the highly competitive global insurance market.” The report stated that most of the growth in this market has come from captives owners outside Asia, for example in Mexico or Australia. However, Marsh suggested that captives have also been affected by the highly competitive global insurance market and current pricing environment, with organisations potentially finding it hard to justify using a captive internally when rates externally are so cheap. In spite of this, Marsh has seen a developing trend of organisations seeking to minimise their external spend taking more business into their captives, notwithstanding that the payback periods are longer. According to Marsh, another challenge captives face is that many Asian countries are seeing some form of economic slowdown, which can have implications for companies considering forming captives. “With businesses less able to suffer the volatility of losses, combined with a ‘cheap’ insurance market, there are considerably less-compelling arguments for assuming additional risk within your insurance programme,” said Stuart Herbert, captives leader for Asia at Marsh. “Of course, it does also present some opportunities for captives in that it can also focus organisation on the level of external spend for their insurance and they may take a more critical view of the spend and whether they can place more risk into their own captives.” n 14 | EAIC TODAY | DAY 3: Friday October 14 2016 www.intelligentinsurer.com | www.bermudareinsurancemagazine.com


EAIC Today Day Three 2016
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