Deutsche Rück to start writing business in Asia

Germany-headquartered reinsurer Deutsche Rück is set to build on previous successful market entries with a move into the South, South East and East Asian markets.

In an exclusive interview with Monte Carlo Today, Achim Bosch (pictured), chief underwriting officer at Deutsche Rück, revealed the reinsurer will begin writing business in the region effective from January 2023.

Bosch said that the reinsurer’s long-term strategy has been to diversify its portfolio, as the firm traditionally had a concentration of business in Germany. Many years ago, the reinsurer expanded into Europe and more recently, in 2021, it entered new markets in the Middle East, North Africa and Latin America. Bosch described the move into Asia as “the next logical step”.

The global CUO did not identify specific countries within the region that would be targeted, preferring to put the emphasis on “searching for profitable business” and “diversified business”.

“We don’t want to concentrate on just a few countries,” he said. “At the beginning we will not be able to do business in every market in Asia, so we will concentrate on a significant number of states.”

The approach to this market entrance will be “exactly the same” as the reinsurer’s way of moving into other new markets, he said, with the most recent point of reference being Latin America.

“The most important thing is who leads the entrance into Asia—that will be Tarik Aouad. He is currently managing director for the Middle East and he will now also head the new markets,” said Bosch.

“He is a very well-recognised reinsurance identity in the region, and has a long and successful history within Asia, as well as the Middle East. Tarik has a wealth of former client relationships already, so he’s the perfect person to lead a dedicated team and manage the market entrance for us.”

The focus for Asia will be on standard P&C business, Bosch said, with clients who are focused on private or assembly business.

Standard P&C is the reinsurer’s “home turf”, as Bosch put it, allowing the company to make full use of the experience in its Dusseldorf-based team. This includes Aouad, who works from the northwest Germany city on the bank of the Rhine.

Building relationships

Deep market experience is not the only reason the new business will be written by teams in Germany. Bosch said that working this way keeps the company’s cost ratio low.

“Our expense ratio is a real advantage, especially in an environment like this with inflation uncertainties about the future, which means pricing uncertainty. Climate change, cyber—you name it—they all add to an environment of uncertainty. A good expense ratio always helps and it’s something we want to keep as a competitive advantage,” he explained.

Climate change and the protection gap are big issues in Asia, Bosch said. “We are a small piece of trying to close that gap as long as it is insurable.”

He emphasised that this market entry is about working with clients who are looking for long-term partnerships with reinsurers rather than opportunistic gains. This will require “client selection in a good way”, he added.

“It isn’t about rapid growth. We want to have continuously rising profits, of course we do, that comes with diversification of our portfolio. But we’re not searching for the big bang for our balance sheet. It takes more time to build up client relationships.”

With the 1/1 and 1/4 renewals approaching, Bosch said the one issue he expects to discuss is inflation, keeping up with that, and finding solutions that are good for client relationships.

“We are not an in and out player, we want to focus on long-term partnerships and this is of course a challenge in such a situation. That needs numerous discussions with our clients especially in the markets in which we lead the business. The rest will be around development of our new markets.

“Solid growth of profitability is our core aim, which is different from maximising profitability,” he concluded.

The first serious Asia market results will be on the balance sheet of 2023, which will be published in 2024.