Hong Kong is a great base for a reinsurer eyeing a global reach: Peak Re CEO Hahn

Hong Kong represents an excellent domicile from which to grow a global reinsurer—in part because of the high-quality talent available, mature immigration system and forward-thinking regulator. This is especially important for reinsurers looking to develop ever-more sophisticated products to clients, Franz-Josef Hahn, the chief executive of Peak Re, told EAIC Today.

Hahn said that the special administrative region of China is home to quality universities, allowing for the recruitment of new talent, and is appealing to seasoned executives willing to move there. “These factors enable us to attract and retain the talent necessary to effectively build and grow the organisation,” Hahn said. 

“The mature attitude of the Hong Kong immigration service towards growing businesses is certainly very refreshing. The other consideration is geographic. Hong Kong has a first-class airport, reaching all major countries in the Asia-Pacific region within just a few hours. It is easy to fly to China, Australia, Singapore, Indonesia, and India.”

This is complemented by a regulator which has done much in recent years to make Hong Kong more of an international hub for insurance and reinsurance. In 2021, for example, it passed a new regulatory regime that would allow special purpose insurers to issue insurance-linked securities in a cost-effective manner. 

“We established our company in Hong Kong because we believe it offers the best strategic location in Asia. As a pan-Asian financial centre with a growing global recognition, Hong Kong provides us with a robust platform for business. Its strong currency, pegged to the US dollar, further enhances its appeal as a stable financial hub,” Hahn said. 

Building on this, he emphasises the importance of having a prominent insurance conference such as the EAIC. “It’s crucial for Hong Kong, especially in the post-COVID-19 pandemic era, to see the revival of the EAIC. With a significant portion of capital and economic activity concentrated in northern Asia—particularly in Japan, China, and South Korea—Hong Kong is ideally positioned to host such an event.”

All these advantages aid Peak Re on its growth curve. The reinsurer has posted strong financial results, reporting a robust profit of $200 million in 2023. For the first half of 2024 the company continued this strong performance, delivering a profit of $124 million and achieving gross written premiums of $848 million. The combined ratio of its property and casualty (P&C) book was 84.9 percent.

“Our profits are strong,” Hahn said. “Our return on equity is approaching our target of 15 percent; it’s currently at around 12 percent. We are confident that this goal is within reach, driven by the ongoing diversification of our global portfolio.”

More than 60 percent of Peak Re’s business is derived from Asia, but the rest comes from the US, Europe, and a small amount from Latin America. 

“We will further drive this diversification because it helps us to achieve our financial targets. The mid-year results are testament to exactly this—the diversification power of the company—and to the growth opportunities which we are seeing, as well as to the performance of the company,” he said.

“We aim to take a more holistic approach across various product lines.”

Structured solutions

Another strand to that diversification was unveiled in April this year when Peak Re launched a new customised reinsurance solutions unit, expanding its structured solutions team. Originally focused on the life and health side, it now includes P&C. Hahn says the move was client-focused.  

“We are committed to expanding the offering to our clients. Rather than operating on a line-by-line basis, we aim to take a more holistic approach across various product lines. One strand might be offering clients balance sheet relief—that is certainly something some companies need. 

“More than ever, clients want new products and new reinsurance structures, which could be multi-line, or multi-year. That’s why we have formed this dedicated team.”

“Innovation and offering bespoke solutions will be more important than ever.” 

This new move allows the company a wider scope when considering renewals. Hahn says he is looking to engage with clients early to better understand their needs. 

“We expect rates to remain broadly stable this year, with specific negotiations on some treaties on loss-affected accounts,” he said. 

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“We are very eager to speak to all of our clients to identify the best solutions for them. That’s the core mission of our structured solutions team, which now includes P&C coverage. They are at the forefront of innovation to our clients and to help them in times which are changing rapidly.”

Hahn describes the business outlook for the second half of 2024 as positive. Demand for reinsurance is expected to remain strong in light of sustained economic losses from natural catastrophes, he notes, saying: “We will continue to exercise stringent risk selection and risk management to limit our exposure, but innovation and offering bespoke solutions will be more important than ever. 

“Our clients’ competitors are not sleeping, and to stay ahead, they must effectively leverage their capital in alignment with their business strategies. Reinsurance solutions are essential in helping them achieve this,” he concluded. 

Franz-Josef Hahn is the chief executive officer of Peak Re. He can be contacted at: franz@peak-re.com

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