Singapore insurers continue expansion drive but returns are not guaranteed

But not all insurers are finding that this market is meeting their needs, as shown by the recent decision of ARIG, the Bahrain-based insurer, to pull out of the region. Do not be surprised to see other major players make partial or full tactical retreats in this and other regions as they struggle to deliver adequate returns in this persistently competitive global market. Beazley certainly does not appear to be a mood to take any backwards steps from the region as it announced new hires and expansion plans for marine, cargo and political risk lines of business. Earlier this month, the company announced the arrival of Kwang Hoon Song from XL Catlin Singapore, who joins to head up its marine hull, war and builders’ risks business in Asia-Pacific.hideHe is joined by Said Khan, who has left Amlin Singapore to become Beazley’s Asia regional head of cargo. And the company announced that Teck Siong Ng will work with Gordon Lam, underwriting manager for Beazley Singapore, to continue the development of Beazley’s specialty lines business in the region, including professional indemnity, directors’ and officers’ and crime. He joins Beazley from the Asia Capital Reinsurance Group, where he was senior underwriter for casualty and financial lines. Andrew Page, political violence underwriter, also joins the Asia-Pacific team from Beazley’s London office, where he has been part of its political risks and contingency team since 2011. “[This year] marks the tenth anniversary of Beazley opening its office in Singapore and our product offerings in the Asia-Pacific region are quickly increasing,” said Gavin Hayes, head of Asia-Pacific at Beazley. “The experience and calibre of Kwang Hoon, Said, Teck and Andrew adds significant additional depth and breadth of talent to our Singapore hub to help us meet the increasing demand from local clients for a broader range of bespoke products,” he added. Mr Hayes told Commercial Risk Asia that the decision to set up in Singapore in the first place and reason for the recent expansion is demand-driven. “Although Beazley continues to write a large amount of business out of London, we’re also responding to demand from clients that are increasingly looking to place business closer to home in Singapore as it develops into a regional centre for Asian business and elsewhere around the world,” he said. “Our Singapore office provides our clients with informed local underwriters that can address their risks across the majority of our worldwide product portfolio. We anticipate our Singapore presence will continue to grow along with the local economies and businesses we support,” he added. Mr Hayes said Beazley is also seeing a rising trend of regional Asian insureds expanding well outside their own local and regional borders. Singapore is well placed to meet their insurance and reinsurance needs, he explained. Beazley has added one underwriter for each year since creation of the Singapore operation in 2010 and now has ten underwriters. Mr Hayes said the “vast majority” of its business comes via brokers. We enjoy working with brokers in the region to help their clients manage their risks across our portfolio of products. Overall, regional growth is driven by a combination of economic development and increasing insurance penetration—as countries get richer they accumulate assets and potential liabilities and consequently spend an increasing proportion of their income on protecting their assets or protecting against the liabilities they might incur. Increased insurance penetration will make Southeast Asian economies more resilient and able to absorb disasters, natural or otherwise, when they impact local businesses and municipalities. Asked where he sees the biggest opportunities by line or territory, Mr Hayes said Beazley sees opportunities across all the lines of business that it writes out of Singapore. He said that Singapore is “fundamental” to Beazley’s long-term strategy and the insurer will continue to add underwriting staff and expand its product offerings for local clients. “Many countries in the broader region offer opportunity, including China, Korea, Thailand, Indonesia, Malaysia, New Zealand and Australia—business from all of these countries is already regularly placed at Lloyd’s Asia in Singapore,” added Mr Hayes. One of the big attractions of the Asia-Pacific region for European and US insurers is the basic fact that regional economies continue to expand and insurance penetration is increasing in tandem, Mr Hayes told Commercial Risk Asia. “Clients in the region are growing fast and their insurance needs are becoming more sophisticated and complex. As a consequence, they are increasingly looking to place business closer to home in Singapore and want the convenience and reassurance that can only come from a team of locally-based underwriters with the relevant expertise and authority to provide coverage for these risks on the ground,” he added. XL Catlin is also very optimistic about the Asia-Pacific region and its growing business in Singapore. Also this month, the company announced the appointment of David Guest as country manager for Singapore. Mr Guest will be responsible for the development and growth of XL Catlin’s insurance business in Singapore, in addition to his current role as regional leader for crisis management insurance in Asia-Pacific. Mr Guest joined XL Catlin in 2013 after 15 years with Hiscox’s London operations, where he worked on a range of marine and specialty lines. Craig Langham, chief executive, Asia-Pacific for XL Catlin’s insurance business, said: “David has played a key role in developing the crisis management book in the region. His appointment highlights the talent we have here at XL Catlin and demonstrates our commitment to the region.” XL Catlin’s Singapore operation was launched in 1999 and can now write more than 30 lines of business, across a broad range of property, casualty, professional and specialty lines. In interview with Commercial Risk Asia, Mr Guest said that Singapore is a “core” market for Asia-Pacific and is an important operation for XL Catlin. He believes the market has really arrived and can only expand from here. “The government’s goal to develop Singapore into a global insurance hub by 2020 has attracted leading industry players in reinsurance and broking, so we have the right partners here. Similarly, many of our global corporate clients are based here and, with a strong underwriting team, we serve clients across the region out of Singapore. So I am excited about the opportunity to lead our team and continue to deliver on XL Catlin’s commitment to the region. Mr Guest said the Singapore operation is seeing growth “across the board”. He added that XL Catlin is capitalising on the market opportunities by making sure it has strong experts to serve its clients with a great “supermarket shelf” of more than 30 individual products. He agreed with Beazley’s Mr Hayes that the increasingly multinational nature of Singapore and wider Asian companies is also providing opportunities for insurers. “As a leading global programmes provider, our products and services, with a strong global claims team, are especially relevant to Singaporean clients operating overseas—we see more opportunities in this area,” Mr Guest told Commercial Risk Asia. The insurer said the Singapore underwriting team assesses risks from across Asia and, increasingly, the world. “We see large investments being made and insurance is sought to enable and protect this. We write a broad portfolio of Singaporean and regional/global business from our office—it certainly keeps life interesting,” he added. While XL Catlin and its rivals in Singapore are keen to get to know the ultimate risk manager clients, they fully understand that the brokers are critical and will remain so. “While we love getting to know our clients and risk managers better, we also value what brokers bring to the risk transfer—so our approach is a tripartite one involving engagement of clients, brokers and XL Catlin,” said Mr Guest. Mr Guest conceded that there would be no easy pickings as XL Catlin and others seek to continue to grow as the market remains so competitive. The key will be to differentiate from the pack by investing in talent and service, he added. “The Singapore and wider Asian market is a competitive one, similar to other hubs around the world like London and Dubai,” Mr Guest told Commercial Risk Asia. “For XL Catlin to succeed, we need a great combination of superior products, talented and driven underwriting and claims teams, and strong infrastructure and support. We have invested in all three of these areas and are confident in our ability to deliver in Singapore,” he added. It is clear that if the commercial insurance market remains as competitive in the long term as it is currently, then insurers are going to have to diversify by activity as well as region and line. Wearing his crisis management hat, Mr Guest said he sees big potential in this area in Asia-Pacific. “We operate in an increasingly volatile, global and connected world—our business is to help our clients protect their people, assets and reputation to safeguard their long-term profitability when the unexpected happens,” he said. “Working with my crisis management team, my role is to help clients take a holistic approach to avoid or manage a crisis; providing preventive consulting resources and expertise to help businesses address food safety, a disappearance, violent acts, as well as incidental or related regulatory and reputational issues,” he added. But, while the potential offered by the fast-growing Asia-Pacific region is tempting, some insurers have found the pickings are not easy. Bahrain-based Arig recently took the decision to pull out of Singapore after ten years, simply because the highly competitive market and rising protectionism in the region has made it difficult to make a decent return. Arig will not be the last insurer to make such a difficult decision as the persistently soft market bites. Amel Dardour, assistant director, corporate communications and business planning at Arig, explained the company’s decision in an interview with Commercial Risk Asia. “Arig has effectively stopped accepting and renewing business through its Singapore branch. This affects all non-life treaty and facultative accounts that were previously accepted through our Singapore operation,” he said. “Arig’s Singapore branch recently completed ten years of operation. Throughout this time, we spent great effort on expanding our company’s footprint in the Far East and making it worthwhile to our shareholders by returning profits on Arig’s capital investment. Much to our regret, we did not succeed,” continued Mr Dardour. “The continued absence of meaningful returns, increasing protectionism among regional insurance markets and the high cost of operation have finally convinced us that it would be better for our group to consolidate and refocus our overseas network,” he added. “This has not been an easy decision as we have thoroughly enjoyed and continue to value our relationships with our clients in the region, the broking community and Singapore’s insurance regulator, the Monetary Authority of Singapore,” he continued. Mr Dardour added that Arig’s “substantial” head office capacity will remain available to all regional cedants. All inquiries will be handled by its underwriters in Bahrain who, he said, will continue to deliver the same service and support that the company’s clients have come to expect. Mr Dardour added that Arig will work with its existing customers, the MAS and the team at the Singapore office to ensure an “orderly and secure” run-off for its existing branch portfolio. Mr Dardour was also keen to stress, however, that its decision to exit Singapore and the Asia-Pacific market certainly does not mean Arig is not keen to expand and the company has some exciting new developments on the horizon. “Global reinsurance markets are currently challenged by overcapacities. With the realignment outlined above, Arig is directing its resources to areas where we can be most valuable to our customers and shareholders alike,” concluded Mr Dardour.

Singapore insurers continue expansion drive but returns are not guaranteed

Want to read this article?

Read Next

Action needed to bridge $800bn Asian climate finance gap

Courage and collaboration needed to manage emerging construction sector risks

Parima heads to Manila for first of three conferences this year

Munich Re ‘more likely’ to exceed 2024 profit target after €2.1bn gain in Q1

Insurance Europe calls for EC to ‘get it right’ on Solvency II

Action needed to bridge $800bn Asian climate finance gap

Courage and collaboration needed to manage emerging construction sector risks

Parima heads to Manila for first of three conferences this year

Munich Re ‘more likely’ to exceed 2024 profit target after €2.1bn gain in Q1

Insurance Europe calls for EC to ‘get it right’ on Solvency II

Want to read this article?

Read Next

Action needed to bridge $800bn Asian climate finance gap

Courage and collaboration needed to manage emerging construction sector risks

Parima heads to Manila for first of three conferences this year

Munich Re ‘more likely’ to exceed 2024 profit target after €2.1bn gain in Q1

Insurance Europe calls for EC to ‘get it right’ on Solvency II

Related Articles