Peak Re ready to deploy fresh capacity at 1.1

Peak Re is positioned to deploy additional capacity at upcoming renewals following recent portfolio remediation efforts, according to CUO Piotr Nowakowski.

Speaking to The Insurer, Nowakowski said the Hong Kong-domiciled reinsurer had earned the right to grow following a period of focused remediation and portfolio pruning, with a string of profitable results offering renewed confidence to clients and investors.

Nowakowski joined the Franz-Josef Hahn-led firm in January 2022 as director and head of product underwriting for the company’s P&C business before being elevated to group CUO in August that year.

The executive acknowledged that Peak Re had been forced to make “tough decisions” to lower earnings volatility and manage exposure and accumulation risk. These remediation measures included materially reducing its top line at the January 2023 renewals as it trimmed its book of property cat business in Europe and the US and improved terms and conditions.

“We realised that we are getting a large number of natural catastrophe losses from our property portfolio. There was a lot of frequency of the loss events, and these were obviously impacting the technical side of the underwriting. But at the same time, 2022 was a very difficult year for the investment side of the balance sheet – it was the perfect storm of negative events.

“This remediation continued for 1 January 2023 and the following renewals but 2024 marked a true turning point. We have achieved a sound and solid portfolio and, despite a significant drop in the top line, our technical result improved substantially.”

The remediation work has been borne out in recent results with Peak Re reporting a P&C combined ratio of 87.3 percent for 2023, an improvement of 22.8 percentage points year on year, and a record net profit after tax of $200mn.

The positive results continued into 2024 with the reinsurer posting an 84.9 percent combined ratio for the first half of 2024 while GWP jumped to $847.9mn from $832.9mn.

And now the business is targeting growth, he said, with this expansion focused on supporting existing clients alongside a “selective” approach to new business.

“We are able to provide additional capacity for all lines of business we are writing today in our portfolio. Heading into renewal, our focus will be on supporting our long-term partners and also on working with new cedants where the portfolio meets our risk threshold, and where we can see the desire for a long-term partnership,” he said.

“We are certainly positioned for growth at 1.1 and intend to use our capacity efficiently, but at the same time, we will continue to maintain the hard-fought discipline that we have executed over the last two years.”

Nowakowski said Peak Re is able to provide capacity with aligned partners in a flexible way and is looking to be a more meaningful reinsurance partner across client portfolios.

“Today, if we have a long-term relationship with a cedant on their property portfolio, we will be looking at what role we can play on their motor business, their casualty business, whether we can engage with them on solutions to develop their cyber portfolio – we want a bigger slice of the pie and to support our clients’ growth across their business.

“We want to grow with existing partners, while actively seeking new partnerships, fostering mutual growth and shared success.”

Earlier this year Bloomberg reported that Fosun International has revived its plan to sell Peak Re, with BNP Paribas SA advising on the process.

Prospective bidders are understood to include investment funds and Asia-based funds, with Fosun placing a valuation of around $1bn on the Hong Kong-based reinsurer.

Nowakowski dismissed speculation around the company’s ownership as “background noise” and was bullish on the prospects for Peak Re, highlighting that the firm has always operated independently – and profitably – without the interference of any shareholder making decisions.

“Our aim is to establish Peak Re as a market leader by building on our track record and reinforcing our role as a dependable reinsurance partner,” he said.

“We are dedicated to creating value for Peak Re, our clients, and all key partners – this is where we invest our time and energy. Everything else is background noise.”