Global expansion and diversification both by territory and line of business is seen as key for Hong Kong headquartered reinsurer, Peak Reinsurance Company Limited (Peak Re).
With a portfolio that was predominantly Asia Pacific focused just a year or two ago, Peak Re has been taking steps to grow into new regions of the world, participating in reinsurance renewals across markets as it seeks to diversify its portfolio.
For reinsurers that were founded in recent years, Peak Re was founded in 2010 with its majority shareholder being investment firm Fosun International Limited (Fosun) and its other being the International Finance Corporation (IFC), developing diversification within the underwriting portfolio is key, but accessing business in new markets can take time.
Peak Re was developed with a mission to provide reinsurance capacity to the Asia Pacific market, but quickly targeted global growth in order to leverage the benefits of diversification within its portfolio, which can only help to make its provision of reinsurance capacity more efficient in Asia Pacific as well.
Chairman of Peak Re Wang Qunbin, a founder of Fosun, commented on Peak Re’s search for diversification; “In 2016, we made further progress towards building a portfolio with a sound diversification by line of business and geography.
“While we have a portfolio that is diversified, it is still focused on Asia Pacific, with 64% from Asia Pacific and 36% from the rest of the world.”
He also discussed the reinsurers strategy for navigating the challenging reinsurance market, saying; “Maintaining the technical margin over years of continuously deteriorating reinsurance markets is a major achievement for which
we commend our underwriting team. Our focus on managing the portfolio to produce low-volatility business continues to serve us well.”
As part of its diversification strategy and global ambitions Peak Re has also looked to acquisitions and moving further up the risk to capital value-chain, with its acquisition of Caribbean insurer NAGICO one example.
“In 2016, we also completed the acquisition of a 50% stake at NAGICO, a leading Caribbean insurer which provides us with access to attractive and diversifying insurance risks for our book of business,” Qunbin explained.
Another move taken by the reinsurer in recent months was the establishment of a base in Zurich, Switzerland, a Solvency II equivalent domicile which will provide Peak Re with enhanced access to European reinsurance risks, a move that the reinsurer said provided a “key asset.”
CEO Franz Josef Hahn commented; “Our new European subsidiary will go a long way in broadening our footprint in this part of the world.”
But while the Solvency II equivalency is key, Europe is far from the only focus for Fosun backed Peak Re.
“At the same time, we will continue to diversify into the Americas and selectively capture opportunities in the Middle East and Africa,” Hahn explained.
He continued; “Our geographical expansion will not compromise Peak Re’s character as a lean and nimble organisation. We will remain one firmly integrated company with a single operating platform.”
Peak Re seeks to be an efficient reinsurance player and while its backing and capital allow it to benefit, the addition of diversification is also key to achieving this goal.
Of course this is vital in a particularly challenging reinsurance market environment.
Hahn recognised this, saying; “Cost efficiency will gain in importance as a competitive advantage as global reinsurance markets continue to soften.”