NEWS
TMK plans ambitious Asia growth
Challenging market outlook fails to dampen enthusiasm for new lines, says Tokio Marine Kiln’s Pavlos Spyropoulos.
Current conditions in the reinsurance market are “difficult”, acknowledged Pavlos Spyropoulos, regional managing director Asia at Tokio Marine Kiln, but this will not prevent the insurer pursuing ambitious plans for significant growth in the region, he said.
Market reports suggest that for the first time since 2008 there will be a reduction in traditional reinsurance capital and the industry is facing major challenges posed by climate change, inflation, and geopolitical issues, he told SIRC Today.
“I think we will continue to see reinsurers adjusting their strategies over the coming quarters as capital providers demand a response to the structural challenges our industry faces.”
He said that reinsurers in Asia-Pacific in particular need to “remain focused on underwriting discipline”, as weather-related losses such as those seen in Australia and North Asia this year are “becoming the norm rather than the exception”.
Spyropoulos described the macroeconomic outlook as “very challenging”, saying that the situation was made all the more unpredictable by the current geopolitical environment.
In the long term, higher interest rates and a reduction in quantitative easing programmes by central banks should, in theory, support the profitability of the insurance sector, he said, adding that such conditions should mean there is less capital chasing risk and an increase in the yield on the industry’s capital base.
“Inflation will put pressure on pricing adequacy.”
Pavlos Spyropoulos, Tokio Marine Kiln
“In the short-to-medium term, however, inflation will put pressure on pricing adequacy and increase claims costs, while a global recession would decelerate gross written premium (GWP) growth and investment returns,” Spyropoulos said.
TMK’s response to these trends is to focus on underwriting discipline, he said. “Our underwriters are required to explicitly consider economic and excess inflation, including social inflation, at a geographic and class of business level.”
Striking a more positive note, he emphasised that a key function of insurance is to help businesses and societies mitigate and respond to risk. “So a central consideration in our business is how we can innovate and develop products further to address the emerging risks our clients are facing.”
With a focus on development, TMK has set out ambitious growth plans for its Asia business in the next 12 to 18 months, Spyropoulos said.
“Our aim is to significantly and profitably grow from the around $100 million annual GWP we currently write. From a product perspective we are primarily looking to do this by further building out our propositions in property, aviation, marine cargo, credit and political risk, accident and health, and political violence and terrorism, and we will continue to assess opportunities to expand into other lines,” he explained.
“We have been able to step up and play a meaningful role.”
“The core tenet to delivering this growth strategy is to invest in our people,” he added.
“To achieve our goals, we will continue developing and empowering our experts and reinforce our client-centric and service-focused culture. We have just completed a significant recruitment drive, which by the end of the year will have seen notable senior underwriting hires and the addition of new assistant underwriter and distribution roles, and we will have further built out our claims team.”
Spyropoulos said that TMK is performing well and is on a positive growth trajectory in Asia-Pacific at the moment, from top and bottom line perspectives. “Over the past two years our brokers and clients in the region have faced a harder market than they have for some time, with many re/insurers tightening their appetites or reducing their underwriters’ authority in the region.
“We have a strong team in Singapore that is experienced, empowered, and service-focused so we have been able to step up and play a meaningful role, particularly on specialist and complex business that there is limited capacity for in a number of domestic markets,” he concluded.
Main image: Shutterstock / nnattalli
