Market Report: Singapore - A hub of activity.

(From Reinsurance)

Byline: Isobel McCalman.

The Singapore economy, like most of the Asia region and the general global economy, has been hit hard by the Sars virus and the Iraq war.

The Monetary Authority of Singapore (MAS) reports that the economy in general contracted by 4.2% on a year-on-year basis in Q2 2003, compared to growth of 1.7% in Q1. However it considers that if there are no external shocks, or a second wave of Sars, the Singapore economy is expected to resume a modest recovery in the latter half of the year.

The (re)insurance sector has shared similarly varied fortunes. MAS finds that growth for the insurance industry is likely to be sluggish in 2003, because of the geopolitical situation and Sars. Indeed single premium life insurance business decreased by 50.9% to $0.8bn in the first quarter of 2003, compared to the same period in 2002. However the reinsurance sector is registering cautious optimism about its prospects in 2003.This is as a result of two themes that have come to dominate the Singapore reinsurance landscape: consolidation and increasing premium rates.

Singapore has enjoyed considerable success in establishing itself as the regional reinsurance centre for Asia. A Standard & Poor's report finds that, as of June 2003, there were 37 professional reinsurers in Singapore, of which 26 write non-life reinsurance business, one writes life reinsurance and 10 write both life and non-life reinsurance. However this represents a somewhat painful consolidation that has dominated the past few years.

Reinsurers such as American Re and M&G Re, have been bought by other groups, while others, such as Alea Re and Danish Re, have closed their Singapore offices.