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Catlin teams up with China Re in Lloyd’s deal

Bermuda-based Catlin Group Ltd is partnering with state-owned China Re to enable the first direct investment by a Chinese company into a Lloyd’s syndicate.

China Reinsurance (Group) Corporation will supply the capital for Syndicate 2088, which will have a stamp capacity of £50 million ($79 million) for 2012.

The new syndicate will be managed by Catlin Underwriting Agencies Ltd (CUAL), a subsidiary of the Bermuda company.

The deal appears to be about knowledge exchange in addition to market access, with both companies stating their desire to learn more about the other’s home-country market.

In a statement released on Friday, the company said the partnership would allow Catlin to expand its knowledge of insurance and reinsurance practices in China, where it has offices in Hong Kong and Shanghai. Catlin is also the largest participant in Lloyd’s China.

As part of the partnership, China Re employees will be seconded to CUAL to gain first-hand experience working in the Lloyd’s market.

While there has been great attention paid to efforts of western insurers to access the China market in recent years, there is a growing realisation that rapidly growing Chinese companies will have an interest in expanding into western markets. This was a topic of conversation among industry experts at the PwC/S&P Bermuda (Re) insurance conference in Hamilton earlier this month.

“This alliance will create a new Lloyd’s special purpose syndicate, which will provide reinsurance support that will allow Catlin to take greater advantage of emerging improvements in many business classes without the need to increase capital,” said Catlin Group CEO Stephen Catlin.

“More importantly, I believe that the group’s partnership with China Re will lead to our increased understanding of the Chinese marketplace, which will produce significant advantages for Catlin in the years ahead.

“I am particularly pleased to welcome some of China Re’s employees as secondees to Catlin.”

Syndicate 2088, which will begin underwriting with effect from January 1, 2012, will underwrite a whole-account quota-share reinsurance of the Catlin Syndicate (Syndicate 2003).

Dr Li Peiyu, chairman of China Re Group, said: “As the biggest reinsurance company in China, China Re’s strategy is to grow both in the home market and abroad, and to have a greater involvement in international markets.

“Setting up Syndicate 2088 and our alliance with Catlin will be a milestone in China Re’s international strategy. This new venture will not only help us to gain a better knowledge of Lloyd’s and benefit from its worldwide network, but it will also increase China Re’s experience of international reinsurance operations and management and help build a foundation for China Re to grow into an important player in the world reinsurance market.

“This strategic partnership will be good for both China Re and Catlin, and I trust it will lead to future of cooperation and development between us.”

China Re’s participation in Syndicate 2088 will allow it to diversify its underwriting portfolio by reinsuring business underwritten at Lloyd’s to which it would have limited access through its existing operations.

The quota-share reinsurance underwritten by Syndicate 2088 will also allow Catlin to increase premium volume in 2012 at a time when rates are expected to rise for certain classes of business without seeking additional capital from existing shareholders

China Re was jointly founded by the Ministry of Finance of China and Central Huijin Investment Corporation with 15 percent and 85 percent stakes, respectively. It’s the only state-owned reinsurance group in China.

Catlin CEO Stephen Catlin

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Published November 21, 2011 at 1:00 am (Updated November 21, 2011 at 8:37 am)

Catlin teams up with China Re in Lloyd’s deal

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