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Far East farsightedness

Source: Asia Insurance Review | Nov 2018

Founded as the pioneer Gulf reinsurer in 1972, Kuwait Re is supported by good geographical diversification, with operations spanning the MENA, Central and Eastern Europe and Asia Pacific, where it has its only overseas office. We catch up with its Far East Regional Office general manager Abdallah Badaoui.
By Chia Wan Fen
“We aren’t transactional. Rather, we look at our partner business model and quality of management before looking to gross income,” said Mr Badaoui, explaining the approach that has helped Kuwait Re achieve steady success in recent years.
Since its establishment in 2006, the reinsurer’s Far East Regional Office (FERO), located in Malaysia, has been expanding its operations in APAC and now covers 15 markets, with China and South Korea featuring dominantly. Mr Badaoui said that Kuwait Re is enhancing its position in key markets in Asia by focusing on two main factors: Being results driven, and establishing and nurturing long-term partnership with companies that offer solid technical returns and best business practices. 
“Our aim is to position Kuwait Re as a reliable and a sustainable proximity reinsurer with a solid rating and outstanding service in the Far East region. In under two years, we’ve managed to reinforce our team with proactive professionals and notably enhance our underwriting decision and claims settlement turnaround time,” said Mr Badaoui. 
Being close to Labuan IBFC helps with another of the reinsurer’s aims – to be among the global leading retakaful players and share its expertise. 
Strong performance
The increase in efficiency led to a substantial growth of its treaty and facultative books, boosted by quality business acquisition. FERO represents nearly 25% of the company’s total business. Kuwait Re reported a 57% surge in net profit, chalking up KWD3.06m ($10.1m) for 2017, compared to KWD1.95m for 2016. 
This was achieved despite a 4% drop in premiums at KWD32.73m in 2017, compared with KWD34.08m in 2016. Boosting the profits were higher commissions received on reinsurance ceded, larger investment gains as well as foreign exchange gains. For 1H2018, profit after tax was KWD1.92m, an increase of 5% from KWD1.84m for the corresponding period last year, while GWP increased by 37% to KWD31.47m. 
Adjusting to the times
Responding to emerging risks, Mr Badaoui said that the reinsurer is looking to put both the expertise and the capacity in place to meet such risks and add those covers to its expanding lists of risk-transfer solutions.
“This is similar to what we have recently done by adding energy, marine and life, where we are offering sizeable capacities managed by seasoned underwriters.” 
The reinsurer has, in the past year, realigned its portfolio mix, on one hand towards facultative and excess of loss business in 2017, with these two lines of business accounting for 58% of the KWD35.1m gross premium written during the year.
Notably, while it has predominantly been a non-life reinsurer, increased diversification has also arisen from the significant growth in the company’s life reinsurance operations in 2017, though the life slant is still predominantly towards the Middle East and Turkey markets.
Still a soft market
The reinsurer still faces challenges. “The pricing against risk has become a source of real discomfort,” said Mr Badaoui. “As a global tier two player, our position is even more sensitive. Our challenge is to maintain a healthy operation, keep a sound risk-based approach while increasing our exposure and accumulation and identifying risks with acceptable terms and pricing,” he said. 
Nevertheless, Kuwait Re takes pride in belonging to that category of reinsurers ‘that doesn’t run after top line or market share’, but is known for its solid business model, where steady growth and the focus on positive technical results delivered to the satisfaction of the shareholders and partners reign. 
“We are a people-driven company and every employee takes full ownership of his duties and contributes to achieve the company’s vision. Our talented professionals are our main asset; they take pride in looking after our partners’ needs and requirements. Our flexibility and how we handle our partners’ feedback is our trademark,” Mr Badaoui said. “We are proud to be in the security list of some leading renowned insurance groups in Asia, and will endeavour to earn this confidence by maintaining high quality service and interaction.” A 
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