Hahn lays out plans for his business and hopes for the market
For a firm which is celebrating its first birthday, Peak Re comes across as a much more mature organisation.
GR, StrategicRISK’s sister publication, interviews Peak Re chief executive Franz Hahn about his plans for his business and his take on the state of the market.
Backed by one of the largest privately owned conglomerates in China as well as a unit of the World Bank, Peak Re has an underwriting capacity of $550m. The group is already writing treaty business in Australia, Bangladesh, Cambodia, China, Hong Kong, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea and Thailand.
Hahn puts much of Peak Re’s growth to its growing number of good staff: “Since 28 December 2012, we have gone from two guys to 40 people from 11 different nationalities.”
He believes that the mix of staff in Peak Re’s only office (in Hong Kong) reflects the “different cultures that we are serving in different countries”. “We also come from different backgrounds, different companies, different insurers or reinsurers,” he said. “But you need to spend time together to build up trust, [so] when we think we are developed enough we may open another office. For Peak Re to expand further, we need passionate, compassionate people who can respect each other and who love to work in a team.”
German-born Hahn originally trained as a lawyer specialising in bankruptcy. He moved to Asia with Munich Re almost three decades ago and has never looked back. But one gets the feeling that Hahn’s latest project is, partially at least, a case of unfinished business.
“I have been here in Asia now for more than 25 years and I definitely didn’t participate very well in assisting to increase the insurance penetration rate in emerging Asia,” he said.
“That’s what reinsurance does – help society to protect their assets in case of calamities, but this is not happening so far. There is still a lot for us to do and to contribute.”
The role of a reinsurer is to develop the right capital and risk management models, as well as products and innovation, according to Hahn. He also thinks that reinsurers need to have stronger distribution channels. “Obviously these channels are not strong enough,” Hahn said. “In Indonesia, in the Philippines and so on, you talk to the people and ask why they don’t have insurance for their houses. They say insurance is something for rich people. This is terrible.
“Natural catastrophes are dreadful and people are at peril. But also the governments and the countries are at peril because if there’s not that opportunity for the people to buy insurance and be protected, it falls back to the governments to pay, and that’s eating into the growth rates of markets of countries.”
Another “unbearable situation” for Hahn is the fact that most of the past decade’s losses have been unmodelled. “If you want to know your numbers, you have to sit down and try to model it yourself,” Hahn said. “That’s what we do, and I’m very happy that we have a young company that has this capability already.”
Indeed, Peak Re’s investment in pricing tools, modelling systems and an analytics team is indicative of the company’s approach to reinsurance. “We have a fantastic fleet of IT solutions,” Hahn said. “We have always insisted that next to the people business is a proper understanding of today’s world and how to use technology.”
Hahn said that “superior underwriting quality” combined with clever client selection would be the key to Peak Re’s success in the coming year. “South Korea, Japan, Australia, then South-East Asia and the Pacific Islands combined together is a nice size,” Hahn said of Peak Re’s target markets for 2014.
“But China will be about 50% of the portfolio and we also want at least 10% of the portfolio derived from the countries that are below emerging markets.”
Broaden the focus to the five-year investment horizon, and Hahn wants Peak Re to be a “sizeable reinsurer respected for its speed, accuracy and integrity with good understanding and pragmatism”.
“We want a clear and consistent approach to serving our clients, and we what to be the go-to people in the Asia-Pacific,” he added.
And beyond that? “In 20 years’ time, we should have built up to be a solid and very respected reinsurer in the region,” Hahn said. “We can do this as long as we have a long-term strategy for our employees, if our investors think long term, and if our clients think long term.”