Welcome to Full Capacity, a weekly briefing on all the most important developments of the past week with a personal take on the news from our editor-in-chief, Mithun Varkey, delivered to your inbox every Saturday.
Nat cat brief. The Australia Reinsurance Pool Corporation (ARPC) revealed that an incredible 88% of all claims submitted to the Australian cyclone pool since its launch in July 2022 are tied to ex-Tropical Cyclone Alfred, which hit the country’s eastern coast this March.
Over the past three years, the cyclone pool has processed 78,372 claims, accumulating a total net incurred value of US$431 million. Incurred claims from ex-Tropical Cyclone Alfred have now exceeded 125,000, totalling US$892 million.
Deal corner. In a significant strategic shift, Japanese insurer Mitsui Sumitomo has announced its acquisition of W&I specialist Time Machine Underwriters, the country’s only notable MGA. This move underscores a transformation in Mitsui Sumitomo’s domestic underwriting approach.
Growing capacity. This week, we noted the emergence of a new MGA in Australia’s competitive financial lines market. Collaboration Underwriting, led by Alistair Sandilands, aims to address “hard-to-place risks and accounts no one else will touch” in the Australia and New Zealand D&O market.
MGAs in focus. The Asia Pacific managing general agent (MGA) sector looks set to join its North American and European cousins on a substantive growth trajectory in the near future as its insurance market continues to contract.
Steve Warwick, managing director of GC Access Asia Pacific, highlighted the importance of specialised talent and advanced technology in identifying unique opportunities that traditional insurers might miss.
Strong distribution networks and a deep understanding of local markets further enhance the position of MGAs in this evolving landscape.
Trump’s tariff tango
As the clock ticked down to the July 9 tariff deadline, there was a sigh of relief when it was postponed to August 1.
However, this fleeting calm is overshadowed by a more complex reality: US President Donald Trump has intensified his trade war against 14 nations, including key players in our part of the world like Japan and South Korea, who now face sharply higher tariffs.
The spectre of tariffs looms large over the (re)insurance markets, casting a long shadow of uncertainty that seems far from dissipating.
While the immediate risks for the wider insurance industry might not be glaringly obvious, the medium to long-term effects could prove substantial.
At a recent IAN webinar, Swiss Re’s APAC chief economist John Zhu posed a question that, until recently, felt more like an academic exercise: What happens if the US dollar loses its credibility?
This is no longer necessarily a hypothetical scenario; it’s a pressing question with tangible implications for businesses everywhere.
Will the dollar weaken?
As Julia Wang, global market strategist at JP Morgan Private Bank, pointed out this week, “Despite the S&P 500’s impressive rally, the US dollar continues to retreat, underscoring a shifting global macro narrative.”
She believes the greenback is still 5-15% overvalued and anticipates further weakness as cyclical convergence and capital reallocation trends unfold.
With the dollar already down more than 10% this year, its worst first-half performance since 1973, it’s time for boards to take stock of what this means for their operations.
The cautionary notes aren’t just for Taiwanese life insurers; the impacts could ripple far beyond that.
As Zhu aptly warned, “I don’t think the industry and even the financial sector as a whole is really prepared for this.”
A loss of confidence in US government debt, traditionally viewed as a global safe asset, could trigger a host of asset-liability management challenges.
For many in emerging Asia, finding hedging solutions may not be straightforward.
From a broader economic perspective, the implications are even more pronounced.
A shift away from the dollar as the default currency for international trade could introduce greater forex risk for both importers and exporters.
At the moment, the risks seem to be underpriced!
People moves
Zurich has expanded Jim Qin’s role as the CEO of Hong Kong general insurance to include chief executive of its life arm.
Canopius has tapped Gallagher Re’s Micia Yong as APAC head of property and specialty treaty.
Dual has refreshed its ANZ regional leadership line-up with dual promotions – Michael Ussher and Paula Sheppard-Jones have been appointed managing directors for Australia and New Zealand, respectively.
For the latest buzz on key appointments across the region, don’t miss our weekly people move roundup.
