SINGAPORE HUB
Chart 5: OIF—Business Lines By Gross Premium, 2013
Casualty
and others 17%
Cargo 6%
Hull and liability 14%
Chart 6: OIF—Business Lines by Gross Premium, 2008
Casualty
and others 21%
Cargo 6%
Hull and liability 15%
risk assessment, pricing, underwriting, and reserving.
Property 63%
Property 58%
Source: Monetary Authority of Singapore. OIF=Offshore Insurance Fund.
Chart 7: Combined Ratio Of OIF Reinsurers Distribution expense (%)
250 (%)
100 150 200
50
Source: Monetary Authority of Singapore. OIF=Offshore Insurance Fund. 0
© Standard & Poor's 2014.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1Q
Source: Monetary Authority of Singapore. OIF=Offshore Insurance Fund.
Management expenses (%) Loss ratio (%)
Chart 8: Combined Ratio Of OIF Direct Insurers Distribution expense (%)
(%)
100 120 140 160 180
20 40 60 80
Source: Monetary Authority of Singapore. OIF=Offshore Insurance Fund. 0
© Standard & Poor's 2014.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1Q
As companies increasingly globalize their operations, reinsurers are finding it difficult to account for that in their natural catastrophe risk modeling. Strong regional economic growth and the corresponding growth in insurable asset values are also rapidly lifting catastrophe exposure. Outdated catastrophe models, unmodeled or insufficiently modeled risks, increasing capacity and competition, and weakening underwriting standards raise the likelihood of unexpected large losses again. Market commentators have also noted that high management and distribution costs for the offshore insurance business, because of its high numbers of expatriate staff, raise doubts about its sustainability. Regulatory statistics showed that distribution and management expense ratios for offshore insurance were about 33% of earned premiums in Singapore, which is slightly higher than in Bermuda (29%–30%). Reinsurers in Singapore writing offshore business had expense ratios of 29% to 31%. Insurers classified as “direct insurers” exhibited higher and more volatile expense ratios, ranging from 39% to 51%. However, this difference is partially explained by variances in business written: “direct insurers” write more tailored specialty business, while reinsurers tend to have a higher proportion of large-ticket business. We expect expense ratios will decline over time as insurers and reinsurers defray fixed costs with higher premium volumes. The expansion of reinsurance capacity globally has contributed to recent market softening, and we expect this trend to weaken underwriting performance in Singapore over the next few years.
Management expenses (%) Loss ratio (%)
“The growing size of the Singapore hub has led to increasing sophistication of underwriters and products, which will contribute to the market’s resilience against large losses.”
46
Global Reinsurance Highlights 2014
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100