Peak Re’s 2022 annual results demonstrate resilience in a turbulent year
3 May 2023
Full-year 2022 key financial highlights[1] and outlook for 2023
“Throughout 2022, the global economy and reinsurance markets were in turmoil due to geopolitical tensions and macroeconomic shocks, amid a receding pandemic and extreme weather events affecting all regions,” said Franz-Josef Hahn, Chief Executive Officer of Peak Re. “While we recorded further premium growth during the year thanks to strong 2022 renewals, our bottom-line results were impacted by significant mark-to-market losses on our fixed-income investment portfolio and continued high levels of catastrophe losses.”
“As well as being a year remembered for major market dislocations, 2022 was also a year in which Peak Re celebrated its 10th anniversary,” Franz-Josef Hahn added. “We have grown to be a trusted reinsurance partner within a short period of time, serving over 580 clients in almost 60 global markets. Despite reporting our first net loss, I am proud that Peak Re weathered this exceptionally turbulent year of 2022 with agility and finesse, adapting to the evolving risk and capital landscape and strengthening itself to embrace further challenges and opportunities for all our stakeholders.”
A turbulent underwriting and investment year
Peak Re’s net earned premiums decreased by 12.8% to USD1.5 billion, as the Company took steps to expand its retrocession protection and sponsored the issuance of the first-ever 144A cat bond to be placed in Hong Kong, through a special-purpose insurer Black Kite Re Limited. The Company’s 2022 underwriting benefitted from the hardening of the market at last year’s renewals. However, technical results were impacted by catastrophe losses, including floods in Australia and South Africa, drought and hailstorms in Europe and hurricanes in the US.
Over the year, Peak Re repositioned and further diversified its portfolio and realigned its book in markets where losses from natural catastrophes continued to increase. Notably, the Company grew its Motor, Accident & Health and Pecuniary business lines and consolidated its presence in Asia-Pacific, now representing 61% of its GWP, with 23% from the Americas and 16% from Europe, the Middle East and Africa. Life & Health remains an important business pillar and a means to further diversify the Company’s portfolio. Peak Re continues to focus on emerging markets, such as China and the Middle East, where demand for health insurance remains strong. The full-year 2022 results also reflect Peak Re’s prudent reserving practice. In light of a year with a flurry of complex loss events for the industry, the Company decided to err on the side of caution and increase its reserves further.
As of 31 December 2022, Peak Re had USD2.95 billion of assets under management, an increase of 6.2% compared to USD2.77 billion as of 31 December 2021. The investment income came in at USD8.3 million, as returns were adversely impacted by the decline in equities and mark-to-market valuation losses on the bond portfolio. The combined impact of losses from natural catastrophes and reduced market valuation of investments led to a drop in shareholders’ equity from USD1.5 billion in 2021 to USD1.2 billion in 2022. Peak Re continued to maintain a strong liquidity and cash flow position, which benefitted throughout the year from robust financial and risk management. The solvency ratio of Peak Re stood at 209% as of 31 December 2022 and has improved tangibly in the first quarter of 2023.
For the full year of 2022, Peak Re reported a net loss after tax of USD81 million. The Company maintained a very competitive expense ratio of 4.4%.
Strong outlook for 2023
For 2023, Peak Re expects to benefit from improved technical results and investment returns. The Company entered the January 2023 renewals well-prepared to capitalise on the hardening market. Peak Re deployed its capacity by taking advantage of favourable reinsurance conditions and moving programmes to higher layers, aiming to reduce exposure to frequency losses, improve profitability and offset costs. Peak Re expects volatility to decrease in the financial markets as the inflationary pressure from rising energy prices eases, and interest rates are expected to rise less drastically than in 2022. The Company further anticipates that the shift to higher-rated and better-yielding fixed-income securities will positively impact on investment returns over the coming years.
All financial statements in the Peak Re Annual Report 2022 were independently audited by Ernst & Young. To view and download the full annual report, please visit Peak Re Annual Report 2022.
[1] All figures that refer to “2022” or “FY2022” in this release are based on audited Consolidated Financial Statements as of 31 December 2022, unless otherwise stated.
- Gross written premiums (“GWP”) of USD2.3 billion, up 7.0% from 2021
- Total assets under management up by 6.2% to USD2.95 billion, investment income of USD8.3 million
- First-ever net loss of USD81 million
- Very competitive management expense ratio of 4.4%
- Strong January 2023 renewals point to improved margins
“Throughout 2022, the global economy and reinsurance markets were in turmoil due to geopolitical tensions and macroeconomic shocks, amid a receding pandemic and extreme weather events affecting all regions,” said Franz-Josef Hahn, Chief Executive Officer of Peak Re. “While we recorded further premium growth during the year thanks to strong 2022 renewals, our bottom-line results were impacted by significant mark-to-market losses on our fixed-income investment portfolio and continued high levels of catastrophe losses.”
“As well as being a year remembered for major market dislocations, 2022 was also a year in which Peak Re celebrated its 10th anniversary,” Franz-Josef Hahn added. “We have grown to be a trusted reinsurance partner within a short period of time, serving over 580 clients in almost 60 global markets. Despite reporting our first net loss, I am proud that Peak Re weathered this exceptionally turbulent year of 2022 with agility and finesse, adapting to the evolving risk and capital landscape and strengthening itself to embrace further challenges and opportunities for all our stakeholders.”
A turbulent underwriting and investment year
Peak Re’s net earned premiums decreased by 12.8% to USD1.5 billion, as the Company took steps to expand its retrocession protection and sponsored the issuance of the first-ever 144A cat bond to be placed in Hong Kong, through a special-purpose insurer Black Kite Re Limited. The Company’s 2022 underwriting benefitted from the hardening of the market at last year’s renewals. However, technical results were impacted by catastrophe losses, including floods in Australia and South Africa, drought and hailstorms in Europe and hurricanes in the US.
Over the year, Peak Re repositioned and further diversified its portfolio and realigned its book in markets where losses from natural catastrophes continued to increase. Notably, the Company grew its Motor, Accident & Health and Pecuniary business lines and consolidated its presence in Asia-Pacific, now representing 61% of its GWP, with 23% from the Americas and 16% from Europe, the Middle East and Africa. Life & Health remains an important business pillar and a means to further diversify the Company’s portfolio. Peak Re continues to focus on emerging markets, such as China and the Middle East, where demand for health insurance remains strong. The full-year 2022 results also reflect Peak Re’s prudent reserving practice. In light of a year with a flurry of complex loss events for the industry, the Company decided to err on the side of caution and increase its reserves further.
As of 31 December 2022, Peak Re had USD2.95 billion of assets under management, an increase of 6.2% compared to USD2.77 billion as of 31 December 2021. The investment income came in at USD8.3 million, as returns were adversely impacted by the decline in equities and mark-to-market valuation losses on the bond portfolio. The combined impact of losses from natural catastrophes and reduced market valuation of investments led to a drop in shareholders’ equity from USD1.5 billion in 2021 to USD1.2 billion in 2022. Peak Re continued to maintain a strong liquidity and cash flow position, which benefitted throughout the year from robust financial and risk management. The solvency ratio of Peak Re stood at 209% as of 31 December 2022 and has improved tangibly in the first quarter of 2023.
For the full year of 2022, Peak Re reported a net loss after tax of USD81 million. The Company maintained a very competitive expense ratio of 4.4%.
Strong outlook for 2023
For 2023, Peak Re expects to benefit from improved technical results and investment returns. The Company entered the January 2023 renewals well-prepared to capitalise on the hardening market. Peak Re deployed its capacity by taking advantage of favourable reinsurance conditions and moving programmes to higher layers, aiming to reduce exposure to frequency losses, improve profitability and offset costs. Peak Re expects volatility to decrease in the financial markets as the inflationary pressure from rising energy prices eases, and interest rates are expected to rise less drastically than in 2022. The Company further anticipates that the shift to higher-rated and better-yielding fixed-income securities will positively impact on investment returns over the coming years.
All financial statements in the Peak Re Annual Report 2022 were independently audited by Ernst & Young. To view and download the full annual report, please visit Peak Re Annual Report 2022.
[1] All figures that refer to “2022” or “FY2022” in this release are based on audited Consolidated Financial Statements as of 31 December 2022, unless otherwise stated.
