DARAG expands its footprint across the world

An increasingly globalised world will need solutions that start in one part of the planet, are developed in another, and applied as well as possible to the remainder.

Tom Booth, group chief executive officer of DARAG, knows this. He sat down in the Re/insurance Lounge, Intelligent Insurer’s on-demand platform for interviews and panel discussions with industry leaders, to talk about his plans in the role he took over three years ago.

DARAG is an expanding company, founded in Germany in the 1920s. Today, it has offices within the UK, Germany, Malta, Bermuda, and the US, and calls itself a “leading international insurance and reinsurance group specialising in the assumption of legacy business and the provision of capital relief solutions”.

“The original German insurance carrier, which remains the largest by balance sheet in the group, was effectively restructured by KPMG about 10 years ago with private equity backing to pursue a continental European run-off plan. There’s a long history there, but DARAG has been a European consolidator of run-off portfolios for a decade,” Booth explained.

His plan for DARAG since he took over has been to grow its North American business alongside running its European portfolio which, he said, was already mature.

“ DARAG had a great track record before I joined,” he said. “It had done 25 transactions in the small-to-medium size area. It had also done a lot in the motor space, particularly within Europe, that had been really successful.

“The other run-off groups were very much focused on the London market, based either there or in the US. DARAG was very different, and I was keen to make sure we could build upon the great reputation we had in Germany and across continental Europe.”

The strength of the company, said Booth, is in the workforce, which DARAG had maintained over the years. “Very few run-off groups have had such a widespread presence in continental Europe,” he explained. “Some of them have had only some local claims teams, whereas we had a fully-fledged workforce based in Hamburg and Italy.

“To differentiate ourselves in the North American market we are in the smaller transactions, which are more involved operationally and less sought-after because of that. We’re not alone in that market, but we’re one of the few in there.”

Different markets

Working across borders does come with issues. Booth says there are distinct differences between the North American markets and the German one, from which DARAG sprang.

“There’s perhaps more substantial opportunity to have bilateral discussions with German carriers. They are occasionally less inclined to go through very widespread competitive tenders and there are some that prefer to work with more trusted partners,” he said.

“There is also a focus on the tenure of the company and its relationships with its peers in the German market, along with the regulator and the domicile of the carrier. Those components are more important, and price is less emphasised, although it is still important. We always have to be competitive, but we don’t need to be the cheapest.”

Booth said that the US, meanwhile, tends to be more driven by price. “While there’s an element of repeat business in the US, particularly in the self-insured space, the market is generally much more brokered. But things are beginning to change, and the reinsurers are focusing more of their attention on some of the potential in continental Europe.”

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Booth discussed what the continuing pandemic-related prevention measures would mean for business relationships.

“The usual Monte Carlo attendees are struggling because of restrictions travelling to and from places. That reduces some of the attendance. Everyone usually welcomes the ability to meet physically, and there’s no substitute for that.

“Virtual meetings do work to a certain extent, and they are obviously in some ways a more efficient process. They work well with tangible projects if you have a good existing relationship with the insurance broker and the carrier,” he said.

The industry will eventually return to travelling, he believes.

“People miss the interaction. There are certain parts of the negotiation that work so much more effectively when you’re sitting across the table from someone,” he concluded.

To view the full Re/insurance Lounge session click here