Deutsche Rück will take its first steps into the life segment outside Germany as a part of the company’s ongoing diversification and expansion strategy, Intelligent Insurer can reveal.

“Our geographic expansion is running as planned.” Achim Bosch, Deutsche RückThe move, which is in its early stages and will see the reinsurer start writing life business in the Middle East and North Africa (MENA) next year, was shared by Achim Bosch, chief underwriting officer at the Germany-headquartered reinsurer, in an exclusive interview.

This latest development follows the reinsurer’s positive experience of writing new business in South, South East and East Asia where it entered several select markets in January 2023. Bosch says Deutsche Rück has exceeded its business plan targets in these Asian markets by “more than double” although the CUO was guarded about sharing exact figures. The company currently writes business in around 10 countries across the region including Japan, Singapore, South Korea, Taiwan, Thailand, and Vietnam.

Commenting on progress since January 2023, he says: “The timing was good as terms and conditions are sufficient, so even if the situation doesn’t guarantee us profit, it makes profits quite likely.”

What has helped is that from the beginning, the reinsurer “clearly communicated our sweet spot”, he explains. Deutsche Rück’s roots are in the classic P&C business, which includes natural catastrophe. So in the Asia expansion, the reinsurer is writing “plain vanilla” private and small commercial business for almost all lines. It doesn’t cover specialty lines and the company is not searching for industrial business. “That is clearly communicated to all partners, whether that’s our customers or brokers.”

There were no premium targets for the Asia market move but the business is working towards an expected result. So far, Bosch says, the results are very good.

“The next step is to grow that portfolio, and of course diversify further. Our geographic expansion is running as planned and we will stick to the countries we are currently focusing on.”

Keeping costs down

Part of the strategy for this expansion is based on the fact that people can work from home, so the reinsurer doesn’t have any footprint on the ground in these regions.

This is partly down to the cost that would be associated with growing teams of people in-country.

“We want to keep our cost ratio low as a competitive advantage. We don’t want to lose that,” says Bosch.

“We don’t want to go for opportunistic, quick wins.”“This has side-effects, but the underwriting is centralised, and it’s based on certain basic principles. Controlling operations from a central base is easier compared to when you have it spread over the world.”

Another philosophy driving Deutsche Rück’s plans is its focus on establishing long-term partnerships. “We don’t want to go for opportunistic, quick wins. We want to stay in Asia and that is driven by extremely long-term thinking.”

“We’re not expanding geographically; we want to consolidate the business to grow profitability.

“We don’t want to add bigger regions for the time being but as a part of the diversification strategy we’re going to start writing life business in the Middle East and the Maghreb states at some point next year. The decision has recently been made and we’re now preparing the organisation for that next step,” he explains.

In the Middle East, the reinsurer does business in the six Gulf Cooperation Council countries—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates—Jordan and Egypt.

The experience in Asia so far shows that the reinsurer’s approach is the right one, says Bosch. He cites Deutsche Rück’s focus on the long term, whether that’s in terms of lines of business and geographies, partnerships or ongoing support for clients with their main treaties, among its success factors.

He credits the reinsurer’s solid and stable rating and its ownership structure, which is not stock exchange-driven, for bolstering customer trust.

The business has very experienced people who run these markets, he says. “When you have people who stand for the ideas that we at Deutsche Rück have, partners who trust those people also trust the company they work for and that has definitely helped,” he concludes.

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