CCR Re targets Asia and Middle East growth following €200mn capital injection

Asia and the Middle East will represent the main growth drivers for CCR Re in the near term, as the recently acquired reinsurer seeks to deploy its €200mn ($214mn) capital injection.

CEO Bertrand Labilloy told The Insurer TV the carrier saw longer-term growth opportunities in South America and Sub-Saharan Africa, where it was currently developing new relationships.

“For the time being, the major driver of our growth is in Asia and the Middle East. But in the future, we hope to rely on South America and also Sub-Saharan Africa, where we are developing some new relationships,” he explained.

Labilloy was speaking shortly after the completion of CCR Re's acquisition by a mutual consortium consisting of SMABTP and MACSF.

The deal, which formally closed in early July, valued the previously state-owned firm at close to €1bn. Under the transaction, the mutual insurers also completed a capital injection of €200mn into the reinsurer, fully financed by the consortium.

This resulted in a holding of 75 percent of the reinsurer’s capital, with state-backed nat cat reinsurer CCR maintaining a share of 25 percent.

Labilloy said CCR Re will continue to operate with complete autonomy under its new ownership, with a ‘Chinese wall’ in place with its parent companies to ensure confidentiality around client information.

“CCR Re will continue to operate fully autonomously,” he said. “We want to help [SMABTP and MACSF] place their reinsurance in the market but they will continue to underwrite separately. There is a full Chinese wall between them and us for obvious reasons.”

On the new capital, Labilloy said: “We will deploy it widely, giving priority to our best clients that we work with across the board and long term.”

CCR first confirmed in September 2022 that it planned to sell a majority stake in its open market international reinsurer by July 2023, in a move designed to fuel the unit’s ambitious target to become a €2bn GWP business within five years.

It came after The Insurer reported last year that the French Ministry of the Economy – under the leadership of finance minister Bruno Le Maire – and CCR had appointed investment banks Credit Suisse and Messier to run the sale process.

Labilloy said that CCR Re – which benefits from a stable A rating from AM Best and S&P – remains on track to achieve its €2bn GWP target, but stressed that the reinsurer will not look to change its business model.

“Maybe we will add some small improvements, some small additional tools, but we're very happy with our strategy which delivers steady growth and more and more profitability.

“Our main objective is profitability. We want by 2027 to achieve a strong double-digit profitability in order to self-finance our growth in the global market, which is growing at 10 percent. I think that with a €2bn book, we will have the critical size needed.”

Further adjustments needed at 1.1

The reinsurer reported a first-half combined ratio of 94.6 percent, a 3 percentage point improvement from H1 2022. It also reported turnover of €907mn in the first six months of 2023, up 19 percent year on year, which Labilloy said reflected the Paris-headquartered reinsurer’s growth at the 1.1 and 1.4 renewals.

Looking ahead to 1.1 2024, Labilloy noted that while the bulk of adjustments to cedant retentions and reinsurance towers were made at the last renewal, there remains some adjustment to be made.

“In particular, we must reflect the impact of retrocession,” he said. “The retrocession market was very, very hard at January 1, and it was not reflected in our underwriting policy and tariff last year, so we will have to transmit this hard retrocession market to our cedants for next year.

“Otherwise I think the relationships with the clients will be quite smoother than last year, because everybody has understood that we should anticipate the discussions and not wait for the last moment.”