Ageas Re to enter financial lines at 1.1 as deployable capacity jumps 25%

Ageas Re, the reinsurance arm of Belgian insurance group Ageas, will double its maximum line size in property cat to €25mn at the upcoming 1 January renewals, with the ambitious carrier also targeting a financial lines reinsurance build-out after the successful entry into casualty earlier this year.

The reinsurer – which began writing third-party property cat reinsurance at 1 January 2023 – is soon to announce the launch of a credit and bond offering, adding financial lines reinsurance as a third pillar to its existing specialty book alongside property and casualty.

Speaking to The Insurer on the sidelines of the annual Rendez-Vous in Monte Carlo, Joachim Racz, group director of Ageas Re, said entering credit and surety was a “natural progression” for the reinsurer, which has a chosen strategy of increasing its market share through a gradual expansion by both line of business and geography.

“We have the actuarial teams, the tooling and the analytics in place and are ready to start underwriting credit and bond from 1.1,” he said. “Market conditions and rate appear favourable in financial lines; it’s an opportunity for us and a line where we feel we can bring meaningful capacity and have an impact.

“Let’s not get ahead of ourselves, Ageas Re will have a modest presence in that market next year but it’s an important line for us and we see it as a key pillar, not just in our wider portfolio, but as a platform from which we can build out our specialty book.”

The reinsurer wrote €108mn in reinsurance premium at 1 January 2024, up more than threefold on the €29mn in its debut year. Looking ahead to 2025, Racz said the business has the potential to grow a further 50-70 percent, given the right conditions, as it brings increased capacity, higher limits and renewed appetite to bear.

“We started small but our ambition is to be a truly global full-service reinsurer,” he continued. “In addition to our financial lines entry we’re also looking at two test cases for global account clients – it’s all part of this process to scale up.

“We’ve traditionally been exclusively a non-proportional reinsurer and for 1.1 I’m removing the restrictions here, enabling our underwriters to write pro-rata business for select portfolios and select clients.”

This growth will see overall capacity increase 25 percent next year. The business will take up to €100mn of risk per any one uncorrelated event, with an average line of €10mn and maximum line of €25mn for 2025, up from €20mn this year. The per risk capacity doubles from €5mn to €10mn for 2025.

The ambitious carrier launched primarily as a property reinsurer in late 2022, and entered the casualty market a year later. Racz said the business underwrote $60mn in casualty premium in year one, far exceeding plan, with further growth projected in 2025.

But Racz – who was speaking alongside CUO and head of property Jeremy Walker – said underwriting restrictions remain, particularly around US casualty.

“Domestic US casualty is a challenged market right now. That is something we will not be writing. Cyber is also a space where we have no appetite. I’ve been very outspoken about this; I feel it’s a systemic risk and doesn’t have a place within our portfolio.”

While the reinsurer initially focused on underwriting property reinsurance in Europe, the Middle East and Africa, it expanded into Latin America last year and has an increasing appetite for Japanese and North American business, and is mulling a push in Korea and the wider Asia Pacific region.

Italy is another market that is showing “very positive signs” in the run-up to the renewals, Racz said.

“We’ll see a rock-hard market in Italy this year, driven by the loss creep we saw earlier this year and the potential changes to earthquake insurance. All the signs point to a demand driven hard market and a loss driven hard market. If pricing allows, I’d be very happy to see us engage to a greater extent in that market.”