Peak Re reports growth amid challenging times in Q1 financials

Peak Re reports growth amid challenging times in Q1 financials | Insurance Business Asia

Reinsurance

Peak Re reports growth amid challenging times in Q1 financials

Firm to approach future with “prudence, courage, and foresight,” CEO says

Reinsurance

By
Kenneth Araullo

Peak Reinsurance Company (Peak Re) has reported record net profits for 2023, totaling $200 million despite the year’s significant market challenges.

This performance marks a notable improvement, supported by a turnaround in reinsurance underwriting and asset management, which drove the company’s total equity up by 14.3% from 2022, reaching $1.28 billion. The company also maintained a strong solvency ratio of 305%.

Franz-Josef Hahn, CEO of Peak Re, attributed this success to strategic adjustments within the company’s property & casualty (P&C) portfolio and consistent client support.

“We reached these remarkable milestones in 2023 through the decisive actions taken to realign our property & casualty (P&C) portfolio and unwavering trust and support by our clients,” Hahn said.

He also noted that despite initial volatility in 2023, characterized by high inflation, tightening monetary policies, and rising geopolitical tensions, the company navigated back to profitability.

The company’s P&C segment demonstrated resilience, with the combined ratio improving dramatically to 87.3% in 2023, down from 110.1% in the previous year. This improvement was a result of targeted management of risk frequency and severity in their property catastrophe reinsurance portfolio, moving away from softer market structures to adopting excess of loss layers with higher attachment points.

“Central to this strategic realignment is our commitment to regular, transparent, and timely dialogues with our clients,” Hahn explained, noting that over 90% of the company’s gross written premium in 2023 was derived from existing clients.

In addition to P&C success, Peak Re’s life & health (L&H) reinsurance business also saw significant growth, aligning with the company’s revenue diversification objectives. The L&H segment’s gross written premium jumped to $438 million in 2023, up from $270 million in 2022.

Despite challenges in the global financial environment, the company continued to enhance its L&H offerings, focusing on innovative risk solutions for underserved markets.

The insurer’s investment portfolio also fared well amid a tumultuous year, with an investment income of $114 million and a yield of 3.8%, benefiting from higher yields and a market shift towards high-quality fixed-income assets.

The total assets under management increased by 6.1% to $3.12 billion, maintaining a strong liquidity position with cash and equivalents making up about 20% of investment assets.

Looking ahead to 2024, Peak Re remains optimistic, anticipating continued strong technical results and a stable investment return outlook.

“In 2024, we maintain a positive outlook for our business. We’ll approach opportunities and risks with prudence, courage, and foresight,” Hahn said.

What are your thoughts on this story? Please feel free to share your comments below.