Catlin, China Re Announce Strategic Partnership; New Lloyd’s Syndicate

November 18, 2011

Catlin Group Limited has announced the formation of a strategic partnership with China Reinsurance (Group) Corporation (China Re) that will result in the establishment of a special purpose syndicate at Lloyd’s of London, subject to Lloyd’s final approval.

Catlin said China Re “will provide the capital for syndicate 2088, which will be managed by Catlin Underwriting Agencies Limited (CUAL), a Catlin Group subsidiary.” The syndicate will begin underwriting as of January 1, 2012. It will “underwrite a whole-account quota-share reinsurance of the Catlin syndicate (syndicate 2003),” which has been the largest syndicate in the Lloyd’s market since 2007, based on gross premiums written.

“The formation of Syndicate 2088 marks the first time that a company based in China has directly invested in a syndicate at Lloyd’s,” Catlin noted. “Syndicate 2088 will have a stamp capacity of approximately £50 million [$79.2 million] for 2012.”

The announcement also explained that China Re’s participation in Syndicate 2088 “will allow it to diversify its underwriting portfolio by reinsuring business underwritten at Lloyd’s to which it would have limited access through its existing operations. The partnership with CUAL, the largest managing agency at Lloyd’s, will also allow China Re to expand its knowledge of how international insurance and reinsurance is underwritten in the Lloyd’s market. As part of the partnership, China Re employees will be seconded to CUAL to gain first-hand experience working in the Lloyd’s market.

“The quota-share reinsurance underwritten by Syndicate 2088 will allow Catlin to increase premium volume in 2012 – at a time when rates are expected to rise for certain classes of business – without seeking additional capital from existing shareholders.”
 
There are benefits going the other way as well. Catlin said the partnership with China Re would allow it “to expand its knowledge of insurance and reinsurance practices in China, allowing the Group to increase its presence in this rapidly growing marketplace.

“Catlin established offices in Hong Kong in 2006 and in Shanghai in 2007, and it is currently the largest participant in Lloyd’s China (Lloyd’s Insurance Company (China) Limited), which was also established in 2007.”

Chief Executive Stephen Catlin commented: “I am extremely pleased to announce our strategic partnership with China Re. This alliance will create a new Lloyd’s special purpose syndicate, which will provide reinsurance support that will allow Catlin to take greater advantage of emerging improvements in many business classes without the need to increase capital.

“More importantly, I believe that the Group’s partnership with China Re will lead to our increased understanding of the Chinese marketplace, which will produce significant advantages for Catlin in the years ahead. I am particularly pleased to welcome some of China Re’s employees as ‘secondees’ to Catlin.”

Dr. Li Peiyu, chairman of China Re Group, also indicated his satisfaction with the arrangement, adding his thanks to “the Lloyd’s Executive Committee and Franchise Board for the approval of Syndicate 2088, the first Chinese direct investment into Lloyd’s.

“As the biggest reinsurance company in China, China Re’s strategy is to grow both in the home market and abroad, and to have a greater involvement in international markets,” he continued. “Setting up Syndicate 2088 and our alliance with Catlin will be a milestone in China Re’s international strategy. This new venture will not only help us to gain a better knowledge of Lloyd’s and benefit from its worldwide network, but it will also increase China Re’s experience of international reinsurance operations and management and help build a foundation for China Re to grow into an important player in the world reinsurance market.

“This strategic partnership will be good for both China Re and Catlin, and I trust it will lead to future of co-operation and development between us.”

Catlin also noted that the “China Reinsurance (Group) Corporation was jointly founded by the Ministry of Finance of China and Central Huijin Investment Corporation with 15.09 percent and 84.91 percent stakes, respectively. The Group is the only state-owned reinsurance group in China with a paid-up capital of RMB36.408 billion [$5.736 billion] and gross premium income of RMB38.13 billion [app. $6.0 billion] in 2010.

“It was first assigned an ‘A’ (Excellent) rating by A.M. Best in July 2010, which was reaffirmed in August 2011. Through its six subsidiaries – China Property & Casualty Reinsurance Company Ltd.(‘CPCR’), China Life Reinsurance Company Ltd.(‘CLRC’), China Continent Property & Casualty Insurance Company Ltd.(‘CICC’), China Re Asset Management Company Ltd.(‘CRAMC’), China Insurance Media Company Ltd.(‘CIMC’) and Huatai Insurance Agency & Consultant Service Ltd.(‘Huatai Service’) – China Re Group provides comprehensive products and services, including not only reinsurance but also direct insurance, asset management, insurance brokerage and insurance media service. A diversified and professional business structure has now taken its shape.”

Source: Catlin Group

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