A growth market: Mapfre Re eyes strategic expansion in China

China’s reinsurance market is poised for sustained long-term growth, driven by an increasing demand for reinsurance capacity. Should favourable regulatory developments also come to pass, more international players will look to enter the market to leverage this opportunity. 

That’s the view of Ignacio Rodríguez Arteche, chief representative officer of Mapfre Re China. Speaking to EAIC Today, he said he is confident that the need for reinsurance capacity will remain strong. “China’s insurance and reinsurance market has potential to sustain growth in the long term,” he said.

Explaining his outlook, Rodríguez Arteche highlighted that the Chinese government is likely to continue to play an influential role in shaping the industry’s growth and development. 

“More global players will be drawn to the market.”

Should there be a relaxation of some regulations around foreign reinsurers operating in China, which may include changes to factors such as minimal capital requirements and mandatory positions filled by local employees, he expects more international reinsurers to enter the market. 

“If there is a further relaxation in the threshold for establishing local operations, we will see more international players doing so,” he said.

Rodríguez Arteche stresses that Mapfre Re’s strategic expansion in China is underpinned by this long-term vision of sustainable growth, coupled with a realistic understanding of the market’s challenges. 

The Spain-based reinsurer obtained official approval from the National Financial Regulatory Administration of the People’s Republic of China to open a branch in Beijing in July. 

While the company has been active in the Chinese reinsurance market for nearly four decades, it believes the new branch will bolster its on-the-ground support for Chinese clients and strengthen its position and visibility across the Asia-Pacific region. In addition to China, Mapfre Re has a direct presence in the Philippines, Japan, Malaysia, and Singapore.

“Opening the branch reinforces our commitment to the market and the intention to increase steadily our support to our current clients and future clients,” Rodríguez Arteche said. 

Despite China’s growth potential, Mapfre Re does not intend to deviate significantly from its existing business strategy. “Mainly, our focus will continue to be in the short-tail lines, including property—cat and non-cat—and on proportional and non-proportional bases,” Rodríguez Arteche said.

With many other carriers expecting China’s insurance sector to grow exponentially in the coming years, the opportunities for growth are clear. Rodríguez Arteche takes a pragmatic view, noting that while growth continues, the double-digit rates of previous years “are not the case now” and rates have transitioned to more moderate single-digit figures. 

“The market is more mature now, and we’re seeing single-digit growth, but there is still growth potential in the long run,” he observed. “The market is recovering from the impacts of COVID-19, and the economy is trying to stabilise.”

Moving into China

This stabilisation, combined with some easing of regulatory restrictions for foreign companies, is presenting long-term opportunities for international companies looking to venture into to China. The market is primarily dominated by local players but Mapfre Re sees opportunities. 

“Rates in the primary side have been low for many years. There needs to be a correction.”

“The local players are well established. They are developing well, and they have all the market knowledge and relationships,” Rodríguez Arteche said, suggesting that global entrants would not immediately disrupt the local landscape.

A promising growth trajectory doesn’t mean there are no pressing challenges. “Rates in the primary side have been low for many years. There needs to be a correction,” he stressed. Adequate pricing, he argued, is essential for reinsurers to provide stable capacity and ensure capital is remunerated fairly.

Another challenge facing the Chinese market is a shortage of talent. Rodríguez Arteche pointed out that the talent pool in China has traditionally been small, and high turnover rates have exacerbated the problem. 

“You hire some experienced candidate, or you train them, and after a short period of time, they move to a competitor for more attractive opportunities,” he explained. This dynamic, while indicative of a developing market, poses a significant challenge for companies investing in training and development. 

However, he acknowledged, this situation has recently improved, with fewer people moving jobs due to the current economic climate. “The talent pool remains small, but people are trying to stick to their positions more,” he said.

To address the shortage, Rodríguez Arteche suggests that companies should engage with potential talent early, particularly at the university level, to increase awareness of the opportunities within the re/insurance industry. 

“Many people don’t know much about re/insurance,” he explained, emphasising the need for educational efforts to attract new talent. He highlighted that leveraging experienced professionals nearing retirement to mentor and train younger employees is equally important. 

Looking ahead, Rodríguez Arteche is optimistic about the long-term prospects of China’s reinsurance market, predicting steady growth, albeit at a more measured pace. 

“I foresee that the government will continue to play an important role in the development and direction of the industry,” he said. As regulatory barriers ease and China’s economy stabilises, he expects that more global players will be drawn to the market, enhancing competition and capacity. 

Rodríguez Arteche concluded by saying that Mapfre Re is “looking for business opportunities in China that are beneficial to both parties”. 

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