Opportunities in China may be overstated, warns Ascot CEO Martin Reith
Re/insurers should not rely on old distribution channels and should look to have a presence in other markets, warned Ascot CEO Martin Reith at a recent press briefing. “If business can be placed locally, it will be placed locally,” he said.
But of all the markets currently projected for massive growth, he was surprisingly downbeat on opportunities in China.
Ascot recently opened an office in Singapore as part of the Lloyd’s Singapore platform. The company also announced on 2 August that it was opening an office in Houston Texas.
Reith said it was important to have a presence in local markets in order to understand the dynamics. This will also help companies realise the true value of the business, he promised.
“I'm not convinced there is profitable business in China at the moment
“If you sit in London and try and write Far East business it is only ever going to look cheap,” he said. “But there are some great accounts out there.”
He urged London and Lloyd’s market re/insurers not to rely on old distribution channels. “You can’t assume it will come into the London market,” he warned.
Despite his enthusiasm for opportunities in Singapore and the Far East, Reith believes China has been oversold and that it has diverted attention from other important markets. He said it was a highly complex market, which still favours local insurers.
“There is all this attention on China but little attention paid to the rest of the world where we get the majority of our business,” he said. “I’m not convinced there is profitable business in China at the moment.”
“We greatly appreciate the opportunity to become a small part, at least initially, of China's huge success story
That the CEO of a Lloyd’s syndicate is dubious about China’s potential flies in the face of the market’s overall stance. Having recently opened Lloyd’s China to much fanfare in Shanghai, senior Lloyd’s figures have been eager to push the market's potential.
Lloyd’s chairman Lord Levene has been a particularly upbeat proponent. At the opening ceremony for the new Shanghai office in April, he said: “This is a significant day in Lloyd’s history. We greatly appreciate the opportunity to become a small part, at least initially, of China’s huge success story.”
Reith acknowledged that China would be "Levene's legacy".