In December 1996 Tokio Marine established an overseas retention hub in the International Financial Services Centre (IFSC), located in Dublin. The main objectives were:

  • To enhance profitability of the group's overseas businesses by maximising taxation and expense advantages present in the Dublin environment;

  • To retain more of the business which had been ceded away to companies outside the group due to the small capacity of each group company;

  • To provide stable reinsurance coverage needed by the group's overseas offices on a long-term basis, without being affected by market cycles; and

  • To utilise financial reinsurance as a flexible way of risk hedging.

    When we reviewed the situation in 1998 there was still a large volume of overseas business remaining with Tokio Marine, Tokyo, and further utilisation of the retention centre was necessary to reduce the operational cost. This became a critical point for the group's survival as a serious player in the competitive marketplace, particularly for worldwide reinsurance operations under the prevalent soft market conditions. We completed our review in 1998, culminating in the decision to place the Dublin-based subsidiary at the core of our new international reinsurance strategy.

    This involved opening the “pure group retention centre” to third party business. Tokio Marine (Ireland) was relaunched as Tokio Marine Global Re Limited (TMGRe) to represent us more suitably in the open market as a serious professional reinsurer. It is a 100% subsidiary of Tokio Marine and Fire. For operational efficiency TMGRe was structured in two divisions: the Intragroup R/I Division serves the group retention centre function, and the Commercial R/I Division is the third party reinsurance carrier.

    Ahead of the January 2000 renewal season we commenced negotiations with many of our clients regarding the transfer of business previously accepted by Tokio Marine, Tokyo to TMGRe. We have stressed that TMGRe has the same AAA rating from Standard & Poor's as Tokio Marine, Tokyo which ensured continuity of first class security to our clients. I would like to take this opportunity to sincerely thank all of our partners for agreeing to such transfer. I am sure that we will be able to provide more focused, client-orientated, and accessible services. At the same time we believe we have secured significant marketing advantage.

    The transfer of international reinsurance acceptances to TMGRe is beneficial to Tokio Marine group not only because of the tax advantage of being located in Dublin, but also because of the flexible IBNR reserve environment compared to Japan, where tax-free IBNR accumulation is not permitted. Another rationale for the transfers was that the resultant reduction in administrative work in Japan, which has the highest labour costs in the world, would enhance our competitiveness by minimising the operational cost.

    As part of the new strategic package for our worldwide reinsurance operations, TMGRe recently obtained its branch office license in Labuan, Malaysia and opened a new marketing office in Kuala Lumpur in July. Two experienced expatriates, Mr K. Maruyama and Mr T. Kawamura, have been appointed respectively as General Manager and Manager of the Labuan Branch.

    As can be imagined, historically Tokio Marine has had very close and good relationships with companies in South East Asia, Far East, India, and Indian sub-continent. It is TMGRe's firm aim to further develop these relationships and network in these areas. Premiums emanating from the region are projected to be ¥5.1 billion for 2001 underwriting year, which represents a major portion of its commercial reinsurance income. This is why we hastened to open a branch office in Labuan, Malaysia. My colleagues in the Labuan Branch are committed to providing more frequent visits and speedy responses to our clients in the area taking advantage of their closer location. We are not only offering reinsurance support for traditional treaty business, but are also prepared to offer guidance in the development of more efficient reinsurance programme arrangements and/or develop new type of covers and creative risk transfer solutions.

    I would also like to highlight one unique feature of TMGRe's Labuan Branch. We understand that various reinsurers have opened offices in Labuan with the prime purpose of writing reinsurance business in Malaysia with local reinsurer status, because foreign reinsurers are finding it difficult to write Malaysian reinsurance business. As far as TMGRe's Labuan Branch is concerned, we have centralised all business from South East Asia, Far East, India, and the Indian sub-continent, in addition to Malaysian business, to form the core of our main portfolio. We are committed to face new challenges ahead and will strive to be always best-fitted to the changing market.

    Takashi Oka is Chief Executive Officer of Tokio Marine Global Re Limited.