Broking group Aon has launched an Asia Pacific Capital Advisory unit within its Reinsurance Solutions operation, as it promises to deliver a holistic approach to capital optimisation for insurers and reinsurers across the region.
Capital advisory and optimisation has become increasingly important across the insurance and reinsurance world, with multiple sources of capacity available from traditional and alternative sources, plus different forms and structures that it can be accessed through.
This has made advisory related to reinsurance capital as important as structuring or placing it, resulting in business opportunities for brokers and an increasing number of them placing great importance on the advisory component.
Aon has already launched similar Capital Advisory units in the UK and U.S., with these specialist units aiming to help insurer or reinsurer clients to optimise their use of capital, employing forensic balance sheet analyses to identify opportunities to improve their capital use.
Aon has hired qualified actuary Seewon Oh, who was most recently an analyst for Smartkarma Innovations researching the insurance sector across Asia Pacific.
Previously, she worked for HSBC as an analyst covering insurance and as a credit analyst at rating agency A.M. Best.
Oh will report to Rupert Moore, CEO of Japan for Aon’s Reinsurance Solutions and she will work alongside Aon’s existing global Rating Agency and Capital Advisory teams, collaborating to meet the needs of Asia Pacific re/insurer clients, across the Property & Casualty and Life & Health sectors.
Commenting on the launch of the unit, Moore said, “In the current environment, many Asia Pacific re/insurers are experiencing low growth, low underwriting margins and low investment income, while facing higher capital requirements due to regulatory and rating agency obligations.
“The goal of Capital Advisory is to help clients achieve capital efficiency either by accessing alternative or traditional capital, or through identifying opportunities that make better use of existing capital, while taking into account cost and returns. This in turn helps them to generate better returns on common equity.”
Asia Pacific re/insurers have been, in the main, slower to take up alternative forms of reinsurance capital given the often low-cost of traditional reinsurance, which has been discounted by globally diversified players in many cases.
But, through advisory and education on the benefits of a diverse range of capital sources within a re/insurance business model, we may see a gradual uptake of alternative capital from more players in the region and advisory units of this kind will help to educate and identify opportunities for Asia Pacific re/insurers to tape into insurance-linked securities (ILS) markets, to complement their other reinsurance capital sources.