Peak Re sees opportunity in credit and surety, despite rising claims 

In recent times, credit and surety insurance has been a good business to be in. Since the end of COVID-19, claims within the business line have remained relatively low. 

But things are changing. As trade patterns shift and geopolitical risks intensify, claims are on the rise.  

To some, that might make the segment seem unattractive. However, Kathleen Koh, Peak Re’s Head of Credit and Surety Underwriting, senses opportunity. 

Koh says that credit guarantee schemes introduced by many governments worldwide, including in Asia-Pacific, helped keep claims low in recent years. These schemes have now largely ended.  

In addition, many countries are facing inflation alongside a worsening economic outlook. Trump’s dismantling of the world trade order has added to the uncertainty. 

“If we’re talking in relative terms, claims are still at a healthy level, and relatively lower than we saw during pre-COVID days.”

Kathleen Koh

Head of Credit and Surety Underwriting at Peak Re

Peak Re is carefully monitoring this rise in claims, but Koh says that, in context, they are nothing to worry about. 

“If we’re talking in relative terms, claims are still at a healthy level, and relatively lower than we saw during pre-COVID days,” she says. 

Supply chain diversification 

Instead, the Peak Re executive is much more focused on the opportunities that the shifting risk profile presents.  

Geopolitical turmoil has encouraged companies to diversify supply chains, triggered new bond issuances and reshaping the risk landscape. New trade tariffs introduced by the US from the start of April have accelerated this trend. 

“Southeast Asia – places like Vietnam, Malaysia, Thailand – have all benefitted from this shift,” says Koh. “This presents us with many opportunities.” 

For the past few years, Peak Re has been seeking to diversify its portfolio into non-property lines of business, largely to reduce volatility and limit the relative exposure of the portfolio to nat cat risk. Credit and surety is a key component of that strategy. 

While Southeast Asia is an important target for Koh and her team, it is not the only geographical region that looks interesting. India and China are also exhibiting high levels of demand for the product. 

In India, where Peak Re recently obtained a licence to set up onshore, the credit and surety market is being helped by the current surge in government infrastructure spending, according to Koh. 

India’s infrastructure spending has grown exponentially over the past decade, and stands at US$128.64bn for 2024-2025, according to the latest Union Budget. This is nearly 3.3% of GDP. 

In China, growth in credit and surety market moderated slightly after COVID-19, as the country’s property market started showing signs of weakness.  

However, Koh says that clients are now seeking new products in other sectors beyond real estate, in order to diversify the risk of their portfolios and continue growth momentum. 

“Credit and surety remain highly relevant as trade continues to evolve,” says Koh. “Exporters are navigating new buyers, trading patterns, and payment options – and this product helps them mitigate some of these uncertainties.” 

But what about the risk? 

However, while the opportunities are clearly there, so is the risk – as Koh explains. 

“This shifting landscape presents both challenges and opportunities. We need to understand the evolving trade dynamics, credit risk implications and how insurers can navigate this increasingly complex global risk environment,” says Koh. 

A lack of certainty over tariffs is a key danger, she adds – especially for those sectors that are fairly sensitive to trade disruption, such as metals and other commodities. 

But Koh sounds upbeat when she points out that the credit and surety market has weathered plenty of storms in the past, including: the 2008 global financial crisis, the first trade war between the US and China in 2018, the arrival of COVID-19 a year later, and the Russia-Ukraine conflict. 

“We keep learning from all these shocks, which strengthens our underwriting discipline and risk management,” says Koh. “I am quite confident that, with each challenge, the industry is becoming stronger and building greater resilience against future uncertainties.” 

Koh says that Peak Re’s credit and surety products now include flexible features, allowing the reinsurer to quickly and easily adjust limits on exposure as market conditions dictate. 

Artificial intelligence can be particularly helpful here. This is something that Peak Re is keen to embrace to help strengthen the efficiency and resilience of its credit and surety business even further. 

“The business has become increasingly data-driven, which means that AI is playing an ever more important role,” says Koh. “AI enables faster and more efficient credit scoring, risk assessment, and pricing. This is the trend of the future.”