Giving back–Andrew Lewis, One Re

Mr Lewis, Chief Executive Officer of newly licensed One Re, says: “My brother and I found ourselves with money in our pockets, in our mid-40s and not sure what to do next. “What we realised, however, was that a lot of money was leaving Africa through insurance businesses without really benefiting the market in which it was created.” The brothers felt they could do something a little different. South African by birth, Mr Lewis decided against launching any new business there because of the way the sovereign ratings are affecting insurance players. Another key factor in making the decision to licences in London was that Mr Lewis has heard a lot of talk of change by the South African regulator.hide“There has been talk of the South Africans deregulating the requirements to be an admitted insurer and that they will accept branch offices in the future,” he says. “It could become the place to be and would benefit us along with the likes of Swiss Re and others.” He adds: “We decided ‘let’s go to London and if we can get through the regulatory environment and get approved in London, the rating agencies and others will have a better view of us.’” Unfortunately for One Re, just as the application was submitted, the UK’s Financial Services Authority was changed to become the Financial Conduct Authority. The application took far longer than anticipated as a result but, on 20 November, 2014, One Re was given the necessary approvals and will start writing new business from 1 January, 2015. The business was capitalised with a $50m cash injection and will write a wide range of non-life business classes. The company is supported by A-rated international reinsurance companies that provide capacity and protection to the One Re portfolio. Mr Lewis says: “There is undoubtedly a return in global risk appetite. Sub Saharan African markets have benefited from renewed investor interest, which has provided an increase in demand for insurance and reinsurance in Africa. “The three key factors needed to support the growth of Africa’s reinsurance markets are: (1) specialist knowledge and technical expertise of risks in Africa; (2) in-country training, skills development and knowledge transfer; and (3) an increase in the retention of risks and premiums in Africa,” says Mr Lewis. “One benefit from the delay in licence approval,” he adds, “is that we have hit the ground running. As part of the approval process we were asked to recruit the necessary staff. It may seem that was an expensive move but what it has allowed us to do is to gel as a team, work out our strengths and be ready and waiting to go the moment that approval finally arrived.” New business The market has already responded favourably, with a surge of interest in doing business with the new reinsurer, according to Mr Lewis. The great news is that the business looks to be geographically well spread, with enquiries coming from South Africa, Kenya and Nigeria but also from smaller countries such as Ghana and really small territories such as Lesotho. “What is unique is that we are the first fully African-focused, London-regulated reinsurer,” says Mr Lewis. “That is what is exciting people. We are fully focused on Africa but are registered in the first world. We have noticed a lot of business was essentially into London. “The reason behind that is people don’t trust Africa enough. They don’t trust what will happen to their money, they don’t trust whether they will be paid for a claim and they don’t trust the levels of competence.” Mr Lewis is quick to add that this is the view of others and not necessarily true but he says perceptions need to shift substantially if business is to be more convinced. He acknowledges that improving competencies is not a quick fix but believes the reinsurers have a real role to play. “In the past, people would rely heavily on the reinsurers for data and information but also for training, advice and experience. “But in Africa that has died away. Now if people want advice they will need to travel to Munich or Zurich, for example, to meet the experts. That is not likely to happen. Africans will travel around the continent but there is often not the financial resource for European trips in that way,” he says. He says training and up-scaling local insurance knowledge and skills in African markets will be a priority for One Re. In response to the challenge, One Re plans to invest in establishing insurance training institutions and programmes, specifically tailored for local African markets. In terms of developing its own business, One Re plans to develop partnerships across the continent with a single key cedant in each country. “By working with a single cedant you can ensure the necessary discipline is in place,” he believes. Mr Lewis is well aware that the UK regulator is slightly nervous of a reinsurer handling African business alone and he says he knows the company will be under scrutiny from the start. He is confident One Re will find the right partners that are professional and competent and that they will be able to demonstrate that to the regulator on an ongoing basis. While each of the African markets is different, with its own characteristics, Mr Lewis says there are a lot of similarities too and his previous experience with businesses in Mozambique and Angola as well as his knowledge of the South African market should put the firm in a good place. “It will not all happen on day one but in the next 18 months we hope to start identifying good partners,” he says. One Re plans to hit the road in mid-January and start travelling across the continent to meet key players. To make life easier for everyone, Mr Lewis hopes partners will all migrate to a single platform and he is aiming for about 37 partners by the end of the process. “By working with local partners we plan to be able to comply with local regulations but bring that first-world level to the table so everyone benefits,” he says. He also hopes to be able to offer support to those looking for global programmes, again making good use of the local partnerships combined with London licensing to combine local knowledge with security for the investors. “I think it is a balancing act,” he says. “For example, take an oil major or a mining company which might have a $15bn value. Imagine there is a loss of some $200m in somewhere like Nigeria where there are local content rules. It would take the local market years to pay that claim off through collecting premiums alone. “Meanwhile, the FD of the company knows he has governments to keep happy, shareholders and other investors all to keep happy too. He has to protect his assets.” Mr Lewis says reinsurers have the opportunity to sit down with regulators and to look in detail at the local markets and see where their support is most helpful. Nigeria ambitions Mentioning Nigeria was no mistake. Mr Lewis says: “Nigeria is a big target market for us. South Africa has been downgraded and is going backwards, while Nigeria is running ahead.” However, he is also a realist. “Oil prices have been going down, which makes it harder for the Nigerian government to have money to spend but in my view Nigeria is a lot more exciting. I enjoy the energy of Nigerian people, they are always looking for an angle.” Mr Lewis is more than aware that the UK regulators will pay particular attention to any Nigerian business but he is confident of finding the right partner. “I know there are a lot of downsides of doing business in Nigeria, but there are a lot of upsides too,” he believes. In terms of the kind of business they are seeing enquiries on, Mr Lewis says he has been surprised and delighted in the interest from the marine sector, while there have also been enquiries from the competitive property and motor classes too. “Infrastructure is very exciting,” he says. “Governments are doing a lot of building and these jobs are committed for the next 15 years.” Like so many, Mr Lewis is excited about the place much of Africa finds itself in. “Nigeria, for example, has a huge and growing middle class. There are opportunities in Angola too but there the money is being kept tight and a middle class has yet to emerge.” But it is the middle classes Mr Lewis sees as making the difference in terms of sustainability of growth well into the future. It is also one of the reasons why he is not so interested in political violence covers, for example. “It is not a sustainable class of business in that people tend to buy cover when there is an election coming but once that immediate threat dies away, they don’t bother,” according to Mr Lewis. He says a lot of investors in Africa are quite resilient—those who have operated in the continent for many years know what to expect and are happy to take the hits, safe in the knowledge that, overall, they will be making plenty of money. As always, he says, it is a matter of knowing your markets, working with the right people and being prepared to play the long game—all hallmarks of his new business.

Giving back–Andrew Lewis, One Re

Want to read this article?

Read Next

AXA P&C increases premiums by 7% as rates rise at AXA XL

Hong Kong and Shanghai to cooperate on captives and ILS

Swiss broker Kessler names head of special risks

US insurers expected to increase casualty pricing as social inflation rises

Consultancy S-RM expands cybersecurity practice to APAC

AXA P&C increases premiums by 7% as rates rise at AXA XL

Hong Kong and Shanghai to cooperate on captives and ILS

Swiss broker Kessler names head of special risks

US insurers expected to increase casualty pricing as social inflation rises

Consultancy S-RM expands cybersecurity practice to APAC

Want to read this article?

Read Next

AXA P&C increases premiums by 7% as rates rise at AXA XL

Hong Kong and Shanghai to cooperate on captives and ILS

Swiss broker Kessler names head of special risks

US insurers expected to increase casualty pricing as social inflation rises

Consultancy S-RM expands cybersecurity practice to APAC

Related Articles