Portfolio differentiation and transparency ‘essential’ in Asia: Gallagher Re MD

In a reinsurance market where growth opportunities and capacity adequacy remain tightly linked, portfolio differentiation and effective management are “essential” to standing out from the crowd, especially in a dynamic and competitive region such as Asia-Pacific. 

That’s the view of Mark Morley, managing director for Asia-Pacific at Gallagher Re. “Portfolios that can show transparency on how they’re managed, how growth is achieved, how margin is achieved, will differentiate themselves positively against those that aren’t able to do that,” Morley told EAIC Today. 

He emphasised that reinsurers are increasingly focused on identifying well-managed portfolios, and that transparency is a necessity for companies seeking reinsurance support.

“In Asia, many domestic carriers operate with a relatively narrow bandwidth of exposure.”

Regardless of market conditions, securing favourable reinsurance terms remains a challenge. “Soft markets are tough, but so are hard markets. No market is easy to negotiate, and that’s the reality,” Morley noted.

One complexity in the reinsurance market in Asia-Pacific is the limited diversification of many domestic carriers. Unlike larger global players, many local insurers are heavily concentrated in their home markets, which can pose challenges when seeking reinsurance capacity.

“In Asia, many domestic carriers operate with a relatively narrow bandwidth of exposure,” Morley explained. “For example, an insurer in the Philippines might excel at managing local business but lack the diversification that reinsurers are looking for.” This can make it harder for these insurers to secure the reinsurance solutions they need to support growth and manage risk.

Reinsurance acts as capital

“The region remains in a relatively scarce capital environment,” Morley said. Insurers are looking for growth in their original markets. “So, while growth aspiration exists, capital isn’t freely available, or it’s available but at a price, because interest rates are still relatively high level, and not coming off at great pace,” he explained.

In such conditions, reinsurance can act as a form of capital, allowing companies to free up resources and pursue growth. “Reinsurance can be a solution. It’s a proxy for capital to allow growth,” Morley said. He added that this has become a key discussion point across the region, where many insurers are using reinsurance not just for risk transfer but as a strategic tool to unlock growth potential.

“This is a big discussion in this part of the world, and there’s a consistent theme around entry points,” he said. “However, what’s different here is that entry points can be existential.

“You can be dealing with an organisation that offers fantastic distribution and outstanding portfolio management but hasn’t yet reached the scale, capital-wise, to retain the levels of risk expected elsewhere in the world,” he explained.

“Structured solutions, volatility covers are existential in this part of the world, which is why you tend to see pretty strong engagement still from the reinsurance market in offering volatility covers,” Morley added.

He stressed that portfolio differentiation is essential for insurers to attract reinsurance capacity. It is not just about managing risk but also about showing reinsurers that the company’s performance is strong and sustainable. “The reinsurers are still willing to engage, but it’s essential that insurers are able to differentiate their portfolios to reinsurers,” he said.

As the Asia-Pacific reinsurance market continues to evolve, Morley believes that the focus on portfolio differentiation and transparency will only intensify. “It’s all about presenting the portfolio in the clearest, most beneficial way possible,” he concluded.

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