Canopius seeks to balance portfolio with APAC reinsurance push

Soon Keen Lee, who was appointed Chief Executive Officer of Canopius in April, says that she wants to grow the firm’s APAC reinsurance book, so that it accounts for half of all business that the specialty player does in the region. She also sees significant potential for growth in Australia.

At present, 40% of all business that Canopius does in APAC comes from reinsurance. Lee regards this as underweight and believes that it should account for half of all business instead.

“Reinsurance is more cyclical than direct insurance, with competition driving market conditions,” says Lee. “Over the last few years, including this year, the reinsurance market has experienced much harder market conditions, at least when compared to some of the primary insurance market. We expect the reinsurance market conditions will remain disciplined for 2025 and hence want to maximise the opportunity and accelerate our growth in this segment.”

“We expect the reinsurance market conditions will remain disciplined for 2025 and hence want to maximise the opportunity and accelerate our growth in this segment.”

Soon Keen Lee

APAC CEO at Canopius

Expanding APAC reinsurance

Canopius’ top three markets for reinsurance in APAC are Australia, China and India. The firm also writes quite a bit of reinsurance business in Korea, Taiwan and Singapore. Lee is now considering what other markets might present growth opportunities as well.

“There are a lot of emerging markets that are growing quite fast where we don’t have a particularly large reinsurance footprint,” says Lee. “These include Malaysia, Thailand and Vietnam. Our market share in most southeast Asia is still underweight and we are seeing this could be an opportunity for our growth focus for the next few years.”

Vietnam is a particularly topical country for (re)insurance at the moment, following the devastation of Typhoon Yagi in October, which caused US$504m in insured losses. This figure was only 17% of total economic losses, however, suggesting a significant opportunity for (re)insurers to grow in the market.

“Vietnam is a market where you are seeing good growth year-on-year,” says Lee. “The challenge is that the terms-and-conditions are really not up to international market expectations. For example, in terms of property lines, the current average market rates are not adequate to pay for the exposure and rising inflation costs.”

Lee thinks that this may be because there are too many reinsurers in the country, and it remains to be seen whether Typhoon Yagi will force a market change.

“I think Yagi is a wake-up call for the industry. Although the loss is not particularly big in the global context, it is huge for Vietnam and expected there will have to be some risk adjustment going forward,” says Lee.

Growth opportunities in Australia

Canopius had a very good year in APAC last year, reporting 35% growth in gross written premiums across the region. GWPs for the group as a whole reached US$2.8bn, a 22% increase from 2022.

The specialty (re)insurer has further built on its success this year. In the first half of 2024, Canopius reported GWPs of US$1.84 billion, up 23% compared to the same period in 2023. It is unclear to what extent APAC contributed to this growth, but in its results Canopius identified it as a key region.

Lee says that much of this growth comes from Australia, which is one of Canopius’ newer APAC ventures. Canopius only opened its office in Sydney in 2019, and continues to build out its team there with a number of key hires over the past 18 months.

Right now, Australia accounts for 30-35% of total APAC business, with business there split 60/40 between direct insurance and reinsurance, according to Lee. The CEO now wants to continue to grow the Australian business to represent 50% of the overall APAC franchise, with the same 50/50 direct and reinsurance aim she is going for elsewhere.

“If you look at the market size, Australia is multiple times bigger than other Asian markets. Based on what we already have in the country, I feel that there is tremendous potential for us to grow our operations and portfolio there. That’s the other plank of our strategy – to tap into growth opportunities there,” says Lee.

According to data released by the Australian Prudential Regulatory Authority (APRA) in September, AU$41.2 billion (US$26.6 billion) worth of premiums were written by the insurance industry in Australia between June 2023 and June 2024, compared to AU$38.1 billion (US$24.6 billion) for the same period a year earlier. This represents an increase of just over 8%.

Building on strong foundations

By focusing on these two core strategies – expanding the reinsurance business and continuing to grow in Australia – Lee hopes that her tenure at the head of APAC can help contribute towards success in the region.

“Our APAC franchise is really strong. We have a very strong team here. Now have to think about how to bring things to the next level and increase our penetration in the market,” says Lee. “In the high-level vision, I want to position Canopius as the preferred specialty underwriting company for both direct insurance and reinsurance in the region.”

To do this, Canopius will be paying special attention to terms-and-conditions in the region, in order to make sure that growth obtained in the coming months and years is sustainable.

“The market is going to be more stable this year as we move into the renewals, with more capacity coming through to APAC. But having said that, I feel that the market will maintain underwriting discipline and expected terms and conditions,” says Lee.