Interview - Things are looking up.

(From Reinsurance)

Byline: Isobel McCalman.

"The atmosphere in the Singapore reinsurance market is cautiously optimistic", says Richard Austen, chief executive of Arthur J Gallagher.

The Singapore market has seen a period of consolidation alter the (re)insurance landscape, following the rush to be based on the island in the early to mid 1990s. However, Arthur J Gallagher went against the flow and as reinsurance offices were more commonly closing or merging in Singapore, it opened its brokerage office at the end of 2000.

Mr Austen qualifies the optimism: "There have been no major losses recently although there are some new serious typhoon losses to assess in South Korea and Japan. Indeed, Korea may be over $6bn. As with other areas of the world it is a period where losses can accrue. We are entering the typhoon season and obviously the effect of hurricanes like the one that hit Bermuda will mean losses across the industry,"

His view is that the current, more upbeat outlook may not survive a busy storm season: "Balance sheets are still not fully fit and a series of major losses may cause a change to the optimistic atmosphere." This delicate balance comes at a time when there are other issues for the sector to deal with. Rates have risen over the last couple of renewal seasons but Mr Austen says: "Generally the recent rate rises were necessary. A chasm has emerged between the rates required by reinsurers and the domestic rates insurers were getting on the street. This means affordability for primary Asian reinsurers is a major issue."

Market dynamics