Asia–Pacific was found to have incurred the greatest economic cost in the world in 2016, due to natural catastrophes in the region. What’s worse, nearly 90% of those losses were uninsured. Seeking to help create a more sustainable APAC economy, reinsurance pro and former lawyer Franz-Josef Hahn started up Peak Reinsurance Company, or Peak Re – a composite reinsurer in Hong Kong.
After 5 years of tailor-making risk transfer and capital management packages to best fit clients’ needs, the company’s footprint has expanded beyond just its Asian home markets to reach Europe and the Americas, including the Caribbean and Central and Latin America, and has fast established itself as a committed, long-term global player.
Speaking with The CEO Magazine, Franz-Josef discusses what compelled him to leave his life as a lawyer in Germany to join Asia’s reinsurance sector, the key highlights since the company was founded, and how, when it comes to risk landscapes, the only constant is change.
The CEO Magazine: Why did you join the reinsurance sector, and what drove you to found Peak Re?
Franz-Josef: I joined the industry in 1986, though I originally became involved as a lawyer. I joined Munich Re in 1986 and moved to Hong Kong in 1989 as head of Casualty until 1995, when I joined Swiss Re in Zurich. After a couple of different roles, I became the managing director of the Greater China region and led the firm to achieve a strong and profitable position from 1997 to 2008. I have also helped the company to obtain one of the earliest regulatory approvals in China and Taiwan to conduct reinsurance business.
While I was taking a break from the reinsurance industry, I thought a lot about what I might do if I had to start again from scratch – what would that look like? I saw a long-term opportunity in Asia–Pacific, especially in the emerging markets. With that, I decided to set up Peak Re.
What was it about Asia–Pacific that presented such a great opportunity?
Looking at insurance rates in the region, I saw that reinsurance was very under-represented, even compared with markets like Latin America and Africa. With a higher frequency of natural catastrophes in Asia–Pacific, and a very strong middle-class society emerging across the region over the past 30 years, the scenario that was looming was the same one that we have seen so many times.
One example that comes to mind is Typhoon Haiyan, which hit the central Philippines in 2013 – a very densely populated area with a strong middle-class society. Because of the under-insurance in the area, many people who lost their assets have fallen back into poverty. The same pattern has emerged across a number of natural catastrophes in the region. A stronger, more secure insurance landscape would stop this from occurring, and create a more resilient society.
What key changes have you observed in the industry these past 30 years that have influenced how Peak Re does business?
Our industry surprises us again and again, because you cannot model all risks; there are always new ones emerging. For instance, when 9/11 hit in New York, nobody would have ever imagined it. It’s a constant expansion of learning and understanding what risk is.
The introduction of new technologies being developed is also bringing different risks, not just with regard to financial technology and the threat of cybercrime, but also things like medical equipment.
Today, diagnostics are much more detailed compared to 10 years ago; we can have a much deeper understanding of disease and the cause of disease. This is posing a higher risk to hospitals for what was not discovered as malpractice in the past, so the insurance coverage is evolving very fast, and prices must be adequately adjusted at the time of the underwriting. The whole world is full of those examples.
Since the company was founded in 2012, what have been some key highlights or milestones?
Developing relationships over the past four-and-a-half years has been an accomplishment, because you need to partner with insurance companies, brokers and academies, and enhance communications with the public. The second highlight was being approached by companies from Europe and North America expressing interest in partnering with us.
That showed us that we can roll out our franchise much faster than we originally planned; we thought that after 5 years we’d start entering Europe and the Americas, but we started building client relationships on those continents by our second year.
The third highlight was last year when we finalised a deal to buy a 50% stake in Caribbean direct insurer, NAGICO, as well as the set-up of our subsidiary in Switzerland, Peak Re AG. That signals to the players in Europe that we have a long-term vision and a commitment to grow in Europe.
We were also listed as one of the Top 50 global reinsurance groups by AM Best, demonstrating that we’ve got the teething problems of a start-up company behind us and we are now a solid reinsurer. I’m positive that this year we will move further up the list. I’m hoping we’ll soon make it to the top 40, then the top 30, and so on.
What gives Peak Re its point of difference in the market?
It’s our team, it’s the culture, and it’s the energy. We are a small team for what we are doing, only 60 people, but each has been picked for their impressive background and team mentality. They must be interested in the work, respect other people, and make decisions as a team. We really value diversity: we have 50% female and 50% male, and we have around 15 different nationalities, with the ability to speak more than 20 different languages; it’s amazing.
I make it very clear to everybody who works here that we are a company without walls. We don’t define our functions by division or by faction, because these are dividing words. We
want combining words, as we all work as one team. It sounds a little bit esoteric, but it makes a lot of a difference to everybody working here.
We are also getting noticed by our clients and brokers because of our culture. They know that they get the answers quickly and very effectively. We have to be faster than our competitors, and that is something understood by everybody in the team very well.
We have around 15 different nationalities, with the ability to speak more than 20 different languages.
We’re at the forefront of IT development and we practise state-of-the-art administrative, underwriting and accumulation tools when it comes to international reinsurance. We’re preparing to put all our own processes on a blockchain capability, which will help us to have secure documentation, and become even faster in the way we are servicing our clients.
Today, around 90% of our claims are being paid to our clients within 5 working days, but one day technology will mean we can pay in 2 seconds, and that is our goal.
Finally, we have the support of a strong, long-term majority shareholder, China-based global investment group Fosun International Limited. Peak Re helps to strengthen Fosun’s reinsurance arm, while benefiting from the firm’s increasing global brand awareness and resources. Through our strong partnership, Peak Re creates synergies with Fosun’s insurance companies and further expands our global network.