New reinsurers to capitalise on Asian reinsurance demand

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Peak Reinsurance Company has received authorisation to launch its underwriting operations in Hong Kong.

The new reinsurer was set up to capitalise on the growing demand for reinsurance in the Asia Pacific region and will be backed by $550m of capital.

Chinese private investor Fosun International is investing about $468m in the company as a majority founding shareholder.

The International Finance Corporation (IFC) is putting in an equity investment of $82m in Peak Re.

Peak Re will insure primary insurers’ risks across Asia with a target of 100 clients in seven key markets in the next five years.

“Increased insurance coverage is important to sustainable business growth and private sector development,” said IFC’s Asia financial markets director Serge Devieux. “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.”

Asia Pacific as a region has been underinsured in general. According to a study by Swiss Re, people in emerging Asian countries spent an average of $27 on non-life insurance policies in 2010, compared to about $50 in global emerging markets and $1,500 for developed markets.

Peak Re chief executive Franz Josef Hahn said: “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 enables Peak Re to develop in a competitive and sustainable manner.”

Meanwhile Fosun’s subsidiaries, Fosun Pharma and Fosun Development, have also obtained two loans of more than 600m yuan (or $8m) from IFC’s local currency programme.

“The project marks a new chapter in our strategic partnership with Fosun International,” Devieux said. “We are committed to supporting our key Chinese clients to expand in the region and globally.”

IFC also invested $25m in Fosun Pharma as part of the company’s initial public offering on the Hong Kong Stock Exchange in October 2012.

“Together with Fosun’s other insurance projects, our investment in Peak Re will create an anchor revenue stream from the insurance business to support our investment activities and transform our business into a world-class investment group in five to 10 years’ time,” said Fosun chairman and Peak Re director Guo Guangchang, chairman.