Peak Re Launched in Hong Kong for ‘Underserved’ Asia Pacific Markets

January 10, 2013

Peak Reinsurance Company Limited formally announced that it has opened for business. The new reinsurer, established to capture the growing demand for modernized reinsurance solutions in Asia Pacific, said it has “successfully obtained the formal authorization by the Office of the Commissioner of Insurance of Hong Kong, with a territorial scope encompassing the Asia-Pacific region, to launch its underwriting operations with an initial capital of US$550 million in Hong Kong.”

Peak Re actually started its underwriting operations on December 28, 2012 when it received its formal authorization, as well as an ‘A-‘ rating from by A.M. Best.

The bulletin explained that the Company is held by Fosun International Limited, which it described as a “company dedicated to becoming a premium investment group with a focus on China’s growth momentum, and the International Finance Corporation (“IFC”), the member of the World Bank Group focused on private sector development, who have respectively invested US$468.05 million (85.1 percent) and US$81.95 million (14.9 percent) in the Company.”

The management team of Peak Re is led by Franz Josef Hahn, co-founder and CEO, and Eckart Roth, co-founder and Chief Underwriting Officer. Both are seasoned reinsurance professionals, each with more than 20 years of experience in the regional and international reinsurance markets, and a proven track record for building up strong teams and successful reinsurance business.

Hahn commented: “The strong financial and technical backing of Fosun and IFC has been critical in making Peak Re a reality. As top-quality founding shareholders, they provide a superb blend of support that we believe will enable Peak Re to develop in a competitive and sustainable manner.

“We believe that Hong Kong is an ideal location from which to build our business, given the city’s ready access to mainland China and other major markets in the region, excellent supply of talented reinsurance executives, and robust legal and regulatory systems,” he added.

The bulletin said the new company “intends to become a leading Asia-Pacific reinsurer that brings together world-class reinsurance experience, as well as profound market understanding and geographic proximity to the region. With an initial focus on property and casualty treaty reinsurance solutions, Peak Re is specialized in developing modernized risk management solutions for the Asia-Pacific community.”

Guo Guangchang, Chairman of Fosun and a Director of Peak Re, stated: “We believe that the management team of Peak Re will shape the company into a leading modernized reinsurer that is worthy of long-term investment in the Asia-Pacific region. Together with Fosun’s other insurance projects, we believe our investment in Peak Re will create an anchor revenue stream from the insurance business to support our investment activities and steadily making inroads to establish Fosun as ‘a premium investment group’.”

The bulletin also explained Peak Re’s view that the Asia Pacific market “has been underinsured in general. For instance, in the aftermath of a series of natural catastrophes in Asia Pacific in 2011, including Thai flood, Tohoku earthquake and tsunami, New Zealand earthquake and Australian floods, less than 22 percent; of the total economic loss registered was insured, significantly below the ratio of insured loss to economic loss seen in the US and Europe in the same period, which stood at approximately 63 percent and 50 percent respectively. In 2010 China suffered its most devastating floods in a decade causing around US$50 billion economic loss, of which only US$1 billion was covered by insurance – another example illustrating the low insurance penetration in Asia.

“In view of the situation, beyond providing general reinsurance solutions, Peak Re also invests significantly in the research and development of risk management solutions tailored for demand by households and business in the region. In cooperation with IFC and Fosun, Peak Re aims to enter into emerging Asian markets including China, India, and Indonesia in the next five years.”

Serge Devieux, IFC’s Asia Financial Markets Director, observed: “Increased insurance coverage is important to sustainable business growth and private sector development. We believe supporting the emergence of strong regional reinsurers such as Peak Re will enable local insurers to expand their products and services and reach more clients.”

In conclusion Hahn pointed out that “Peak Re enters the market at a time when Asia Pacific is the focus, and increasingly, driver of the global economy. In light of the strong underlying growth, increasing value concentration and rapid accumulation of wealth, we wish to help the Asia-Pacific community achieve a more reasonable level of financial protection against risks, notably the natural catastrophe exposure.

“To that end, we have started engaging in close dialogue with the private and public sectors, including national insurance industries, governments and supranational organizations. We also intend to grow Peak Re both organically and strategically via the acquisition of portfolios of profitable underwriting business.”

Source: Peak Re

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