“ For international reinsurers, the trading relationships go back an awfully long time—that’s why the Europeans are so strong in the region. They’ve been dealing with the same people for 10 years and with the same company for 30 years.”
STEPHEN MAY: At this stage of the evolution, it’s not clear. Quite a lot of companies are setting up at the moment using their world brand name rather than the Lloyd’s name. So people such as Flagstone Re and QBE are setting up, and people say: “Don’t they have a syndicate in Lloyd’s, and aren’t they here and don’t they write similar business?” That’s one area where the Bermuda-based companies, if they have a Lloyd’s platform and an international presence, choose not to use a Lloyd’s platform as the local entity. And that is confusing. You are handling a potential conflict, because the local guy would rather the local business come to him, and the international guy would much prefer to remotely write a balanced portfolio sitting where he is. So there’s no question at all about it, they’re both saying: “Come to me.”
HELEN YATES: Do the prospects for takaful [Sharia- compliant] insurance excite anyone?
AHMED RAJAB: It’s very important to demystify the word ‘takaful’. It is not an innovation but one of the oldest forms of insurance—it’s exactly the same as mutual insurance whereby profits are redistributed to policyholders. The only difference is the name. Takaful is geared towards personal lines rather than major industrial risks.
CHRISTOPHER PLEASANT: We’re seeing a lot of countries now introducing regulation about compulsory insurances and, obviously, those two will grow hand in hand. But it’s more private lines business than commercial risks, and therefore it’s a different type of distribution.
TIM GRIFFIN: There’s probably also less pressure on the reinsurance side because there’s not much retakaful capacity.
TREVOR OATES: It comes back to the whole concept of how Lloyd’s is viewed outside of London. There is still a certain mystique about Lloyd’s of London and, if you set up locally, you might slightly undermine that opinion. But also, if you set up locally, what is it you want to write? It’s the economics of the situation. If you set up a platform, you’ll have the expense of a platform, but you might not get the premium volume in order to make it worthwhile.
CHRISTOPHER PLEASANT: That’s interesting, because Lloyd’s would probably just be a promotional office, but would that drive more business being written in Lloyd’s or not? For some of the major reinsurers, you see them setting up in the Middle East and writing business that their counterparts in Europe would never write, because the rates look a bit thin. But if they set up somewhere such as Dubai or Bahrain, they write that business because having made the commitment, you have to write the revenue to support it.
MATTHEW CHANDLER: There are different options people have got in the Lloyd’s Market. The international brokers probably do a lot of the relationship-building through their offices on the ground, and the trips they make support the business in London. The important thing is that there is clarity as to what people want to achieve.
14 | INTELLIGENT INSURER | Middle East Report 2010
AHMED RAJAB: It’s interesting that you say that because, on the treaty side, we are insuring some takaful operators, and they are asking for more and more of their business to be placed with retakaful reinsurers. And the international players are asking why we’re reducing their shares despite their security and strength, and the only answer we have is that they want to have their reinsurance placed with retakaful players. Scor, Munich Re and Hannover Re have all set up retakaful operations.
TIM GRIFFIN: I think there have been moves in recent years to try and establish retakaful operations in Lloyd’s.
MATTHEW CHANDLER: In a Lloyd’s context, takaful is not something we’re looking at. Retakaful is something where there are possibilities, but it’s still at a very early stage of development.
HELEN YATES: Stephen, are you seeing any requests for takaful captive structures?
STEPHEN MAY: Yes, but as Ahmed says, it’s simply one of a number of decisions that have to be made, so investment strategies, domiciles, structures and reinsurance purchasing—whether you want to be retakaful or not—is just one decision that’s made relatively early on.
TREVOR OATES: I take a very simple view, which is that we’ve spent 400 years developing an insurance and reinsurance product here in
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