The past decade has been a period of rapid expansion for Latin American reinsurer Patria Re, seeing it reach well beyond the region and broaden its offering to all lines of business. The opening of a carrier in the US will further drive its growth.

The company’s success has been fuelled by cross-selling and maximising its existing distribution channels, and it’s now poised to build on its partnerships with managing general agents (MGAs) while addressing key issues for its continued health—notably, nurturing the talent pipeline.

Patria Re’s chief executive officer Francisco Martinez highlighted to Monte Carlo Today the ground covered in the past three years in particular, with rapid expansion outside of Latin America doubling Patria Re’s income.

“We’re now about to close 2022 with an income of approximately $550 million, which is quite an achievement coming from a small company 10 years ago,” he said.

“We’re very proud of the technical results we’ve achieved; the last decade has been very volatile in the cat arena, and in the last five years we’ve achieved a combined ratio of 89 percent.”

Over the past five years, Patria Re has opened all lines of business, cross-selling through its existing client base and distribution channels to create a more diversified book of business.

The firm has accelerated its overseas expansion—its Lloyd’s special purpose arrangement 6125 was placed into run-off for 2021. The firm still has its London office, which is now writing double the income it did with SPS 6125.

Latin America remains Patria Re’s core, and its cross-selling strategy aims to offer clients a solution for every need.

“We’ve achieved that by going into joint ventures or strategic partnerships with people that have the expertise to sell certain products,” said Martinez. “We cannot develop everything in-house so we find partners who can add value for our existing clients.

“Our operating structure is strong enough to offer the high-quality service our clients demand, and we have historically been known for being the first to pay a claim. We need to work hard to be the first one to pay with a portfolio that is probably three times the size and complexity that it used to be.”

Spreading the wings

Martinez expects further growth from international expansion, and with more people employed in London, that portfolio is expected to double or triple in size in the next five years. A partnership approach has enabled it to take advantage of the hardening market, especially in the US and Europe.

Patria Re aims to build its Corporate Solutions Division, taking advantage of its unique position in Latin America to bring in partners that do not have a licence to operate in many LatAm countries, writing larger lines, adding value, and solving problems for clients in very specific geographies such as Argentina, Brazil, Chile, and Mexico.

Martinez sees opportunities in marine and terrorism, cyber, and in the strikes, riots and civil commotion arena in Latin America. He added that Patria Re’s strengths include its efficient cost structures—its expenses, not including commissions, are running at below 3 percent of cost premium.

“We have to work hard on keeping that advantage so we can offer more competitive products to our clients,” he said. “That means being very efficient on expenses.”

Another challenge is retaining talent.

“Fortunately, in Mexico, where we have our headquarters, we’re able to find very good professionals,” he said. “The Mexican universities provide about 10,000 actuaries per year so we can take advantage of young professionals who want work experience.”

In the last five years Patria Re has started providing capacity to MGAs and around 10 percent of its income now comes through those channels.

“We’re continuously looking for underwriters or MGAs that need capacity, and can match or add value to our distribution channels in Latin America,” said Martinez.

Another key development is the opening of Patria Re’s carrier in South Carolina in the US, which will start writing business in 2023.

“The idea is for that vehicle in an initial stage to be a sovereign risk hedge for Patria Re in Mexico, but in the medium term, it will offer another paper for our clients: a US-based rated carrier that offers capacity and a distribution channel for our fee-based business.”

It will open the way for reinsurers licensed in the US to access Latin America through Patria Re’s connections to Mexico.

Francisco Martinez is chief executive officer of Patria Re. He can be contacted at: contacto@patriare.com.mx