Validus Re Sees Asia as Key to Diversification

Validus Reinsurance Ltd. [78113] is looking into business opportunities in the Asia-Pacific region through a new representative office in Singapore set up to enhance client knowledge.

The Singapore representative office will play an active role in conducting market research for the region as this is the first time the company will have a presence in the Asia-Pacific, said Steve Bardill, international executive vice president of Validus Re. The new move also demonstrates "how importance we view Asia," he said.

The move to establish a presence in Asia is a major step for the Bermuda-based reinsurer because the company is seeing "positive" business development and high potential for growth in the region in spite of the current economic downturn. Bardill said the financial crisis is rather seen as an opportunity for the company, with its "strong capital base and risk management skills."

As part of the reinsurer's business diversification strategy, Validus Re is exploring into opportunities in Asia along with other global markets. The presence in Asia is in line with the reinsurer's operational goals for strategic growth with the development of new clients.

In Asia, insurance penetration is still relatively low, and hence, it offers room for business growth in the region, Bardill told BestWeek Asia/Pacific.

The Singapore office will focus on short-tail business classes including marine, property and other speciality, said Bardill. As a hub for the region, Bardill noted Singapore is an established market for those lines, with good support structures.

Validus Re's affiliate Talbot Underwriting Ltd. [48393] already has an operation in Singapore.

To begin with, Bardill said the role of the Singapore office is to develop as a service center. The representative office is headed by Marc Haushofer, former chief executive in Singapore and Southeast Asia for Munich Re [85011] and former chairman of the Singapore Reinsurers' Association (BestWire, Feb. 19. 2009).

In the short term, Bardill noted the global economic meltdown has an impact on marine lines because of shrinking trading activities around the world. Still, the reinsurer is optimistic for new business development.

Currently, all business is primarily developed from the Bermuda head office. It is possible Validus will set up other new locations in Asia, but that would be determined by the development of Singapore office in the next few years, said Bardill.

Validus Re had total gross written premiums of US$691.4 million by September 2008. Of that, 46% came from property catastrophe, 19% from marine, 11% from specialty and 24% from other property, according to the company. The reinsurer's combined ratio stood at 139.9 in September, up from 44.1 a year earlier.

Validus Reinsurance Ltd. currently has a Best's Financial Strength Rating of A- (Excellent).