Full-year 2023 key financial highlights and outlook for 2024[1]

• Best-ever net profit of USD200 million after tax
• Reinsurance revenue of USD1.56 billion, a decline of 14.6% from 2022
• Reinsurance service results of USD189 million, against a loss of -USD132 million in 2022
• Assets under management up by 6.1% from 2022 to USD3.12 billion, investment income of USD114 million
• Total equity rose 14.3% from 2022 to USD1.28 billion, solvency ratio of 305%[2]
• Favourable January 2024 renewals point to sustained strong underwriting margins

Hong Kong, 2 May 2024—Peak Reinsurance Company Limited (“Peak Re” or the “Company”), the Hong Kong-based global reinsurer, released its annual results for 2023. Despite the numerous market challenges faced in 2023, the Company achieved its best-ever net profit of USD200 million. This outstanding performance was bolstered by a strong turnaround in reinsurance underwriting and asset management. Accordingly, total equity grew robustly by 14.3% from 2022, reaching USD1.28 billion. Furthermore, Peak Re’s strong solvency ratio of  305% underscores the Company’s solid financial strength.

“We reached these remarkable milestones in 2023 through the decisive actions taken to realign our Property & Casualty (“P&C”) portfolio and unwavering trust and support by our clients,” asserted Franz-Josef Hahn, Chief Executive Officer of Peak Re. “Despite the heightened market volatility and uncertainty that marked the beginning of 2023—characterised by stubbornly high inflation rates, tightening monetary policies and escalating geopolitical tensions—we persevered. Our team’s courage and our clients’ steadfast support not only led us back to profitability but also allowed us to fulfil our commitment to serving their needs.”

P&C portfolio demonstrates resilience in uncertain times

“The success of our P&C portfolio realignment is clearly demonstrated by the significant improvement in our P&C combined ratio to 87.3% in 2023 from 110.1% in 2022. This is achieved through focused efforts to manage the frequency and severity risks of our property catastrophe reinsurance portfolio. We strategically moved away from soft-market structures, such as quota share reinsurance with wide loss corridors and multi-risk aggregates and moved to adopt excess of loss layers with higher attachment points,” Mr Hahn added. “Central to this strategic realignment is our commitment to regular, transparent and timely dialogues with our clients. We consistently present alternative solutions and help our clients to restructure their reinsurance programs as needed. Our strong and enduring client relationships are best exemplified by the fact that over 90% of our gross written premium (“GWP”)[3] reported in 2023 derived from existing clients.”

L&H growth in line with revenue and diversification objectives

In 2023, Peak Re’s Life & Health (“L&H”) reinsurance business, a strategically targeted growth area, demonstrated further expansion and enhanced profitability. GWP surged to USD438 million in 2023 from USD270 million in 2022, in line with the Company’s revenue and diversification objective.^[4] Despite the challenging and uncertain business landscape, particularly concerning interest rates and bond yields, Peak Re remained resolute in strengthening its L&H business franchise. The Company continued to invest in developing its L&H reinsurance capability, focusing on innovating risk solutions for underserved segments and niche markets.

Investment portfolio weathered a stormy year in good shape

Peak Re’s prudent and conservative investment strategy, which involves maintaining investments in line with the short duration of the Company’s underwriting liability and prioritising high-quality fixed-income assets, has positioned the Company favourably in 2023. The Company has benefited from higher running yields and the allure of “flight to quality”. These positive outcomes, along with the progressive reversal of previously unrealised losses on fixed-income assets, have contributed to a robust investment income of USD114 million and an investment yield of 3.8%.

Over the course of 2023, the total assets under management of Peak Re increased by 6.1%, reaching USD3.12 billion compared to USD2.94 billion in 2022. Notably, the Company maintained a robust liquidity position, with cash and cash equivalents constituting approximately 20% of its investment assets.

Collectively, 2023 was an outstanding year for Peak Re. The Company achieved a net profit of USD200 million, supported by a diversified and profitable underwriting portfolio, as well as liquid and quality investment assets.

Navigating 2024: An optimistic outlook guided by prudence and foresight

In 2024, Peak Re anticipates several key developments that will shape its performance. The Company expects sustained strong technical results driven by rigorous risk selection and prudent underwriting. As confirmed by the renewals in early 2024, the global reinsurance market continues to harden, albeit with price momentum variations across markets and lines of business. Capital providers remain cautious to expose equity to reinsurance balance sheets due to the persistent trend of costly catastrophic losses. Estimates suggested that insured losses from natural catastrophes exceeded USD100 billion for the fourth consecutive year in 2023.^[5] Simultaneously, Peak Re expects investment returns to remain steady in 2024 in view of a stable to lower interest rate outlook in 2024.

“In 2024, we maintain a positive outlook for our business. We’ll approach opportunities and risks with prudence, courage and foresight,” Franz-Josef Hahn concluded.

[1] All financial figures in this press release are for the year ended 31 December 2023 and are based on IFRS 9 and IFRS 17, unless stated otherwise. Comparative figures for the year ended 31 December 2022 have been restated to the same accounting standards.

[2]  The solvency ratio of Peak Reinsurance Company Limited mentioned in this press release is the statutory solvency ratio based on the requirements under the Hong Kong Insurance Ordinance (Cap.41) as of 31 December 2023.

[3] Gross written premiums (“GWP”) are calculated according to IFRS 4.

[4] L&H GWP include short-term health business.

[5] “2023 Natural Catastrophe and Climate Report”, Gallagher Re, 2024.