5 facts about our reinsurance business in 2021
The Ageas reinsurance journey has been evolving since 2015 when it first established an internal reinsurance subsidiary (Intreas). From a small satellite internal activity, Reinsurance has grown into a significant segment of the Group, delivering business and capital synergies to protect and strengthen the core business. Here’s a snapshot of Ageas’s reinsurance business in 2021 in 5 facts.
Aggregating the reinsurance business within the centre of the Group enables the most efficient and flexible allocation of available capital within Ageas. In the past year we have continued to make good progress in further evolving Reinsurance into a distinct business line for the Group. We have delivered gross inflows through Reinsurance of EUR 1.6 billion, of which 0.2 billion was derived from Reinsurance placed in the external markets before. We realise substantial operational (re)insurance revenue which in turn helps to provide the necessary capital we need to hold to support the business.
The diversification benefits that Reinsurance brings can be captured at two levels:
- Engaging in reinsurance activities supports a well-balanced product-mix and geographical footprint in the Group. As an important life insurer, our capital requirement is driven by market risk. Since only marginal additional capital is needed against the additional risk, the Group has been exploring opportunities in the non-life reinsurance space. In 2021 we increased our participation in a number of different non-life treaties in our joint ventures in Asia, such as Muang Thai and Taiping Re.
- And the second aspect of diversification comes from retrocession. This means that as a reinsurer we have the capacity to transfer parts of the risks we have reinsured to other reinsurers, and as such building our desired diversified net risk retention.
It’s been a massive year for the reinsurance market. Global insured catastrophe losses rose to the fourth highest level on record. Extreme weather events including thunderstorms, heatwaves and hurricanes accounted for a large percentage of total claims. The Covid pandemic continued to impact the global health and economy. The July floods in Europe were the costliest natural disaster for the region for more than 50 years.
Having a reinsurance capability helps us to better master these types of events than a stand-alone insurer who shoulders all of the exposure from these events locally.
We reinsure important parts of the risks underwritten by the different operating companies of the Group in Europe and Asia. Adequate risk retention at Group level combined with efficient multi-territory Group reinsurance programmes optimises the level of protection of both Group and local companies and minimises the total external cost.
Without doubt one of the most significant recent developments has been Ageas’s decision to invest in Taiping Re, a well-known and well-established reinsurer in Asia. This not only reinforced our bond with the China Taiping Group, it also represented a real opportunity for Ageas to position itself as a full-fledged external reinsurer. Over the past year we have worked closely with Taiping Re as they explore ways to progress and optimise their presence in the European market. Ageas can play a pivotal role in helping Taiping Re to tap into reinsurance opportunities in Europe. As a local player Ageas provides strong insight into underwriting practices and opportunities in Europe, as well as knowledge of the insurance sector and the local regulatory environment. Together we are exploring several significant initiatives that will allow us to accelerate and play an even more important role moving forward, taking this partnership to the next level. To be continued…
We have only scratched the surface of what could be possible with reinsurance. Enhancing our reinsurance skills and networks can deliver capabilities to support and enable the Impact24 growth engines. We see many potential cross-pollination opportunities. Take digital platforms or health initiatives for instance: Reinsurance can be an enabler to share these across our markets whilst capturing part of the benefits at the level of the Group through reinsurance agreements. The reinsurance evolution is gaining momentum and the realisation of Impact24 will further enhance the growth potential.