Arch Re is sniffing out opportunities in Asia’s life and A&H markets after the announcement of its intent to buy a stake in an Australian marketing and distribution company.
Part of the Arch Capital Group, the Bermuda-based reinsurer is a relatively small player that prides itself on an opportunistic, go-anywhere approach that allows it to move quickly on attractive deal flow. But its foray into Asia through Precision Marketing Asia Pacific looks like a more strategic move.
As its name suggests, Sydney-headquartered Precision Marketing specialises in highly targeted multichannel distribution and product design. It harnesses artificial intelligence and a team of data scientists to build campaigns, predominantly in the life and A&H sectors, where Arch Re is keen to expand its presence. Precision Marketing has 35 people and is led by chief executive Keith Lowry with additional offices in Hong Kong, Jakarta and Tokyo.
While Bermuda has traditionally been known for catastrophe cover and captives, life is now the island’s biggest sector by assets and it is rapidly gaining expertise in the area, often in niche corners of the market that the dominant global reinsurers are less interested in.
With limited prospects for the life market in the US and Europe, Asia by contrast offers plenty of opportunity for stable, long-term growth and portfolio diversification — and the kind of technology that Precision Marketing specialises in is fast becoming an important and valued differentiator in the life reinsurance market.
“Once the transaction is complete, we believe adding Precision Marketing Asia Pacific’s range of services, including customer-focused distribution techniques and data-driven targeting, will enhance Arch Re’s overall value proposition in Asia-Pacific markets,” said Maamoun Rajeh, chief executive and chairman of Arch Worldwide Reinsurance Group.
“We have observed some signs of discipline returning to the reinsurance market”– Marc Grandisson, Arch Capital
Positive signalArch has reduced the size of its reinsurance book during the persistent soft market conditions of the past few years, but it has been sounding a more positive tone on the business recently. In an earnings call with analysts last week, the group’s management said they would look to expand the reinsurance platform as the market improves.
“We have observed some signs of discipline returning to the reinsurance market,” said Arch Capital’s group chief executive Marc Grandisson on the call. “In our facultative reinsurance business, we are seeing increasing submission levels and much improved pricing. Fac reinsurance has been a leading indicator of treaty market conditions historically, and we like the positive signal fac is giving us at this point.”
The company has significant capacity to take on more exposure. Its self-imposed internal risk limitation is 25% of equity capital, but its current 1-in-250-year probable maximum loss is just 6% of equity, according to Grandisson.
That should be welcome news for life cedants in the region as the addition of new reinsurance counterparties is a positive in a market that is so dominated by a handful of big players.

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