Ageas Re targets €1bn GWP in long term but will have “modest impact” at 1.1

Ageas Re, the newly launched third-party reinsurance operation of Belgian insurance group Ageas, has long-term ambitions to write gross premiums of €1bn ($1.02bn) but expects to have a “modest” and “limited” impact at the upcoming 1 January renewals.

Speaking to The Insurer on the sidelines of the annual Rendez-Vous in Monte Carlo, Joachim Racz, group director of non-life reinsurance and operations at Ageas Group and Ageas Re, said he wished to “manage expectations”, noting that Ageas Re would be starting “humble and small”.

“We’re not going to have a massive impact on the 2023 renewals, let’s be clear,” Racz explained.

“What we’re doing here is managing the expectations of our brokers and clients to avoid a situation common with new market entrants where [risk] appetites are over-promised and under-delivered.”

The executive said Ageas Re’s short-term aim is to establish a “robust” reinsurance operation that serves predominantly local and regional European clients with a personal lines profile, with the unit targeting a “gradual expansion” by both line of business and geography.

He said Ageas Re’s risk appetite for property cat would be limited at circa 20 percent of written premium at launch. The business will take up to €40mn of risk per any one uncorrelated event with an average line of €5mn and maximum line of €10mn.

In the longer term, the platform will develop into a Europe-based reinsurance operation focusing on purely non-Asian markets and offering all major lines of business across most non-Asian geographies with a GWP target of €800mn to €1bn.

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.

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.

While Racz acknowledged that the improved rating environment was also a factor in the decision to launch Ageas Re, he dismissed the notion that the firm’s entry into third-party reinsurance was a purely opportunistic move.

“The fact that we have launched Ageas Re at a time when market circumstances are extremely favourable is pure coincidence. We would have done this in any event,” he said, adding the move was a “principal tenet” within its Impact24 three-year strategic plan, which identified reinsurance as a “key engine” for future growth.

“We declared that reinsurance would be a key driver of growth before the hard market really kicked off,” he continued.

“We declared reinsurance as a strategic field, and have made a strong commitment at the senior level. It’s part of our long-term strategy and part of a long-term commitment to building a dynamic market.”

As previously reported, 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.

In a statement announcing the launch last week, 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.