Developing reinsurance activities at Ageas

Antonio Cano, MD Europe and responsible for Reinsurance, reflects on the Group’s reinsurance activities in 2020.

Developing reinsurance activities at Ageas

It is now two years since Ageas decided to enter Reinsurance, why was this such an important move for the Group?

The decision to move into the reinsurance space introduced higher flexibility and greater agility allowing Ageas to execute its strategy more efficiently. As a reminder, this business allows the Group to reinsure important parts of the risks underwritten by Ageas’s insurance companies operating in Europe and Asia. By centralising risks in this way Ageas increases the fungibility of capital. And in return our local operating companies gain from their ability to manage their solvency ratios at a highly competitive cost.

What were the highlights of the reinsurance activities in 2020?

We have made important progress in the Non-Life capital management reinsurance business. We increased our share of Non-Life reinsurance activities via Quota Share treaties with our entities in Portugal (from 20 to 40%), and in Belgium and the UK (from 30 to 40%). The total inflow for this business amounted to EUR 1.5 billion in 2020.

In the Non-Life protection business, we were also able to realise an important increase in the reinsurance business volume (+20%) through increased participations in reinsurance treaties with our entities in the UK, Turkey, and Thailand.

And we started a protection business for our Life activities, by underwriting a 50% share in the treaty with Ocidental, part of Grupo Ageas Portugal.  

But the most important step forward in our reinsurance aspirations were thanks to an important strategic move taken in Asia. We subscribed to a capital increase in Taiping Reinsurance Co. Ltd., expanding our reinsurance activities in Asia through the acquisition of a 25% stake in the company for a total consideration of EUR 340 million.

Why was the investment in Taiping Reinsurance Co. Ltd. (TPRe) such an important one for the Group?

This important investment was further evidence of our commitment to Asia providing us with leading positions in the reinsurance market of Hong Kong and the fast-growing Chinese reinsurance market. TPRe is one of the top Asian reinsurance companies with a strong track record and promising growth potential. Since 2013 gross written premiums have grown annually on average by 27% resulting in EUR 1.7 billion in 2019, with strong potential in the future.  

TPRe is also a wholly controlled subsidiary of our long-standing partner China Taiping Insurance Holdings. So, through this transaction, Ageas has also reinforced its strong long-term strategic partnership with China Taiping. By subscribing to this capital increase we also created a better balance between our Life and Non-Life activities, an important strategic goal.

What are the next steps for this partnership, how will it evolve?

This is a story of collaboration impacting both Asia but also Europe. Along with TPRe and Taiping Group, Ageas will help support the company’s development outside Asia and specifically in Europe, to safeguard the global diversification that is beneficial for such a business.  

We have jointly identified areas where we can work together and create synergies. This collaboration spans the sharing of product and distribution expertise from across the Group with TPRe, allowing the company to include value-added services for clients. 

As well, we already participate in the retrocession programme of TPRe, which will support us in our efforts to build a diversified portfolio for Ageas Reinsurance.

What is our ambition for 2021?

We will continue to develop internal Reinsurance as a new separate business line for the Group. We want to leverage the reinsurance activity to optimise the overall capital allocation within Ageas. 

We will also support TPRe in their ambitions to grow significantly outside their current core markets. We intend to guide them specifically in their approach towards extending their activities in the European markets.

The further development of our Life reinsurance activities is also on the agenda. We could already put in place an important treaty with Ageas France, transferring most of the Longevity Risk in the company to Ageas Reinsurance. And we are examining possibilities to set up treaties with other entities like Ageas in Portugal. We will also explore further possibilities to collaborate with our Joint Ventures in the field of reinsurance, mainly in Non-Life business but also in Life where possible.