Ageas Re to begin underwriting reinsurance at 1.1

Twenty-plus years ago most of Europe’s international insurers had a reinsurance unit, that is until the WTC loss, APH deteriorations and the soft market of 1997-2000 saw many wind down or spin off their operations.

So, there was particular interest in Belgian insurer Ageas’s strategic decision to launch Ageas Re as a third-party reinsurer from 1 January 2023.

The insurer already has indirect reinsurance exposure via the 25 percent stake it acquired in Taiping Re. But from next year, Ageas Re will write reinsurance in Europe, the Middle East and Africa.

Group CEO Hans De Cuyper said it was a committed, long-term decision by the carrier: “In our Impact24 strategy, we made a clear and long-term commitment to reinsurance as a growth engine for Ageas.

“So, for us this is not an opportunistic, short-term play, but deeply entrenched in our strategy. We look forward to engaging with clients and brokers to build this business in a sustainable way over the coming years.”

Ageas’ entry into third-party reinsurance comes at a time when some carriers are leaning into the strong pricing environment and deploying more capital on property catastrophe reinsurance, while others have announced exits or significant pullbacks, including Axis Capital, Markel, Axa XL, TransRe and Scor.

Earlier this year, French mutual Covéa finally ended its search for a reinsurer by completing its €9bn acquisition of PartnerRe.

While reinsurance typically provides more volatile earnings, it also provides diversification for commercial insurers such as Ageas and Covéa.

The reinsurance business will be underwritten by Ageas’ holding company, Ageas SA/NV, a licensed reinsurer since 2018 which benefits from an A+ rating from S&P.

Ageas said that reinsurance has grown from an internal activity to become a significant segment of the group with a top line of €1.6bn and net profit of €87mn in 2021.

It added that the improved rating environment was also a factor in its decision: “Ageas currently sees favourable market conditions in terms of pricing but also a high dynamic in the reinsurance market, offering opportunities to start building new and long-term client relationships,” it said.

The impact of inflation – together with concerns over climate change modelling, “angry” jury awards, Ukraine uncertainty and the rise in loss frequency/severity – is expected to result in rising rates in 2023.