Qatar Re to cash in on US rate recovery

Bermuda-based Qatar Re is set to seize the moment to increase its exposure to the US as rates there recover following the nat cat losses in the third quarter, Luke Roden, chief underwriting officer, short tail classes and head of ceded re, told Baden-Baden Today.

Qatar Re, which was created five years ago, currently has a portfolio with an exposure to the US of around 20 percent and has recently increased its capital base. “We see opportunities in the US in the short-tail lines,” Roden said.

While good business to underwrite is not easy to find in the current soft market, nat cat losses of estimated $100 billion in the third quarter from hurricanes Harvey, Irma and Maria (HIM) are expected to improve underwriting conditions.

The company was exposed to heavy losses from the events. Its parent company, Qatar Insurance Company (QIC), posted a net underwriting loss of $28 million for the first nine months of 2017 (versus an underwriting income of $151 million in the same period of the previous year). Its non-life combined ratio stood at 108.2 percent, compared with 98.9 percent in the previous year.

Losses were mainly generated by HIM in the third quarter. Through Qatar Re and Antares’ Lloyd’s syndicate 1274, QIC has had a sizeable exposure to these events, which resulted in net losses of about $174 million. In total, the three disasters added 10 percentage points to QIC Group’s combined ratio and eroded 6.5 percent of the group’s total equity.

But the company is now ready to take advantage of the change this could trigger in the market.

“Anything that had losses will definitely have a rate increase,” Roden said. “It’s good timing to rebalance the portfolio.”

Qatar Re does not depend on retrocession and capacity is therefore available immediately, he stressed.

Europe will, however, remain the anchor for Qatar Re. The reinsurer is looking to continue growing, particularly in Germany, France and the UK.

In Asia, which represents less than 10 percent of its portfolio, Qatar Re is carefully considering the expansion of underwriting, but it is a tough market at the moment due to price competition, Roden said.

“We have no pressure to grow the top line; we are focusing on the bottom line,” Roden noted. “We are here for the long term.”

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