SINGAPORE HUB


data from Global Reinsurance Highlights show an average growth of 8.2% over the same period (see Table 3). Singapore offshore insurance premiums grew 5.9% in 2012 as reinsurers focused on managing 2011’s catastrophe claims and recapitalizing and strengthening capital positions (see Chart 4). Nevertheless, premium growth


recovered moderately in 2013 and turned more robust in the first quarter of 2014, rising 19% quarter on quarter.


Diversity And Skill Build Strong Fundamentals


We expect strong growth in property, property catastrophe, and specialty premiums


Table 1: Bermuda Insurers And Reinsurers 2011


Gross premiums written (US$ mil.) Net premiums written (US$ mil.) Loss ratio


Expense ratio Combined ratio


Total equity (US$ mil.)


66,943 53,765 74.4% 29.4% 103.8% 89,506


Source: Bermuda data from Deloitte’s Bermuda Insurance Market Reports.


Table 2: Singapore Offshore Insurance Fund Direct And Reinsurers 2011


Gross premiums written (US$ mil.) Net premiums written (US$ mil.) Loss ratio


Expense ratio Combined ratio


Total equity (US$ mil.) Source: Offshore Insurance Fund. Chart 3: 2013 Offshore Insurance Gross Premium Global


reinsurers 24%


Other 28%


Direct 22%


Credit 0%


Captive reinsurers 9%


Bermudian reinsurers 6%


Sources: Monetary Authority of Singapore and Standard & Poor's. © Standard & Poor's 2014.


Lloyd's 11%


Other


reinsurers 12%


Regional reinsurers 14%


Protection and indemnity 2%


4,206 2,848


261.8% 35.2% 297.1% 3,223


2012 4,453 2,723 47.5% 33.0% 80.5% 3,584


2012 72,395 58,264 62.0% 29.7% 91.7%


101,520


2013 76,039 61,549 55.8% 29.8% 85.6%


101,982


in Singapore’s offshore insurance hub as the country enhances tax exemptions for offshore insurance businesses. In 2013, Singapore gave tax exemption to property catastrophe excess- of-loss reinsurance, and brokers received tax rebates for offshore specialty insurance business. However, we believe the overall business mix will not change significantly due to tax incentives over the next two to three years because building expertise in new business lines takes time.


Property insurance continues to dominate offshore business for Singapore, and its share of total offshore premiums rose 5 percentage points between 2008 and 2013. This indicates an increase in property risks, with catastrophe elements, in the Singapore hub (see Charts 5 and 6). Although the shares of gross premiums by the other lines fell between 2008 and 2013, their premium volume still grew significantly in absolute terms (see Table 4). Premiums from marine cargo and hull grew about 13% to 14% yearly, while casualty increased about 11% yearly.


2013 4,847 3,164 41.1% 33.4% 74.5% 4,073


The growing diversity and increased number of reinsurers in Singapore in recent years has strengthened the hub’s fundamentals by offering more sophisticated products to the regional market. For instance, Lloyd’s established its Asian operations in Singapore in 1999. Lloyd’s Asia is the largest platform outside London, housing 18 service companies that operate 22 syndicates in Singapore alone, which have contributed significant growth to the market. Gross premiums written by Lloyd’s Asia have grown at an average of 26% annually over the past five years and contributed to 11% of offshore insurance premiums in 2013.


The top 15 insurers and reinsurers made up 75% of the offshore insurance market in 2013 and are mostly international reinsurance groups (see Table 5). Premiums written by this group increased by more than 110% over the past five years, contributed mainly by property line. While some of the top 15 players were new entrants to the Singapore hub and are mainly reinsurers (including captive reinsurers), others have significantly ramped up their business in recent years. As economies in Asia prepares for increased trade as ASEAN nations open up their borders in 2015, we expect reinsurers to stand ready to support the growth.


Profitability Boosts Sustainability The growth of Singapore’s reinsurance


44 Global Reinsurance Highlights 2014


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