ISSUE 3 / 2015

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Dear Readers

ED I TOR IAL

Welcome to the first edition of our Qatar Re newsletter this year. Following a successful January 1

renewal, Qatar Re remains on track to building a strong global reinsurance franchise. We also marked our presence at the recent MultaQa Qatar conference, the leading risk and insurance platform in the Middle East, where our CEO Gunther Saacke contributed to the well-attended global reinsurance panel discussion.

In this issue, Alastair Speare-Cole, our new Chief Underwriting Officer, gives us his ‘View from the Top’, i.e. his vision, ideas and expectations for Qatar Re as well as his assessment of the company’s greatest strengths. You’ll also be introduced to the new Global Fac team whose team members come from around the world and bring a wealth of knowledge and experience to the table. Currently they are writing Off- and Onshore Facultative Energy business as well as Facultative Engineering and industrial property business. You’ll also learn about Qatar Re’s Structured Finance and Reinsurance line of business and how our clients benefit from the team’s specific expertise; as well as our strong financial results in 2014.

Finally, in his interview, Andy Ross, the new CEO of Qatar Insurance Company Europe Ltd, talks about the opportunities for and advantages of the company’s new Malta office.

As always, we look forward to receiving your feedback.

Your Qatar Re View editorial team

Valetta, Malta

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What is your assessment of the current market environment, also in light of your longstanding experiences from the broker side?

The reinsurance business model as we know it has to change, because the portal to the capital markets is now open. In addition, the current wave of M&A and the increasing scale and diversification of mid-sized reinsurers changes the playing field. In that sense, much of what we’ve learned and known over the past 15 years may need to be rethought. We certainly have to work even harder to convey our specific value proposition to our clients which is around insurance entrepreneurs and small cedants, specific class and geographic expertise where this still has relevancy, and having a strong portfolio approach to commoditized reinsurance business.

What is your vision for Qatar Re?

For me, I currently see Qatar Re as a top ten reinsurance company that provides individualized services and tailored offerings to our clients. Qatar Re already differentiates itself from its competitors through clients’ direct access to its decision-makers, a solutions-based approach and adequate line sizes. In addition, I am passionate that being able to act with speed, flexibility but still with rigor. To combine these three can be a huge differentiator. Many of our competitors are slow and inflexible and whilst rigorously make decisions that quite frankly show they have missed the point!

What does that mean?

Let me explain further. n Speed is not just about keeping up with the changes in

the market, carefully tracking developments and being able to quickly act upon them. We should never lose sight of what is happening around us. But it is also about taking the everyday response to brokers and clients quickly. And the same applies to our internal stakeholders.

n Flexibility is about making principle based rather than rule based decisions. We need to remain innovative, challenge each other’s ideas and every once in a while move outside our comfort zones.

n Rigor is all about getting to the heart of the matter without being distracted by irrelevant detail.

We must be prepared to tear up the rule book without abandoning the fundamental principles on which they were based.

Where do you see Qatar Re’s main strengths and what do you feel still needs to be done?

In its brief history, Qatar Re, under the leadership of CEO Gunther Saacke and his management team, have done an amazing job at setting up the company and getting it running with the speed and size it has today. That is an incredible accomplishment.

One of the key strengths is the direct access clients and brokers have to decision-makers. This is enhanced by our underwriters’ longstanding experience in the industry, a grounded attitude towards risk as well as a healthy risk appetite. They are the front line of the company and both producers and risk selectors that are all a part of shaping this company, developing our expertise and building our books of business. Our people need to be able to adapt. This is key to our survival in our fast changing industry.

The challenge remains, in my view, to get processes running even more smoothly and efficiently and to be able to access the status of our underwriting decisions and performance at the push of a button. Another aim is to stimulate thinking with an even broader perspective on our client and broker relationships, the interconnectedness of lines of business and geographies and to develop a mindset away from silos. Maybe this entails taking an unconventional route at times. We need to be prepared to make mistakes in order to learn from them. My responsibility as a leader and CUO is to guide and foster collaboration across all lines of business and get everyone truly focused on embracing our values.

What would you say is the biggest asset you are bringing to Qatar Re?

I have a passion for making things easy, simple and meaningful and I would like us to have a common view on our vision, strategy and values.

Looking to the foreseeable future, where do you see the company five years down the road?

In five years’ time I’d like to see Qatar Re as a successful and prospering reinsurer that is valued for its expertise and professionalism, conducting business on a single platform with speed, flexibility and rigor; a reinsurer that is known for its innovation, foresight and long-term client relationships. I am convinced that Qatar Re is here to stay, as part of the QIC family, while supporting the Group’s increasingly international purpose.

Our aim is to be a top ten reinsurer recognized for its quality of security and consistency of relationships with its business partners. Also, we strive to contribute profitably and intellectually to the integrated risk platform of our parent company, the QIC Group. Thus, I would like our people to feel that we have created an attractive environment for the development of our insurance professionals.

VIEW FROM THE TOP

Alastair Speare-Cole, Qatar Re’s new Chief Underwriting Officer, joined the company roughly two months ago. He talked to QR View about his ideas and expectations for the growing company

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Michael Gertsch, Global Head of Facultative, Zurich

Michael Gertsch joined Qatar Re on February 1, 2014, from Gulf Re where he was Chief Executive Officer from March 2011 to November 2013 after serving as the company’s Chief Underwriting Officer since its establishment in 2008. Prior to joining Gulf Re, Michael held the position of Deputy Head of Specialty Lines, managing PartnerRe’s worldwide industrial Property,

Energy and Engineering treaty and facultative operations. He has been in the insurance industry for more than 25 years and has held various treaty and facultative underwriting positions at General Re and Swiss Re UK.

Nabih Massaad, Head of Fac Engineering and Head of Doha Operations, Doha

Nabih Massaad joined Qatar Re on March 11, 2013, and has worked in the construction industry for seven years where he was a project manager for several construction projects in the Middle East. He moved into the reinsurance industry more than 17 years ago and has since held senior engineering underwriting roles in both treaty and facultative at

GE Frankona and Swiss Re Zurich. Prior to Qatar Re, Nabih spent three years as managing director of a reinsurance brokerage firm operating in the MENA region.

global fac: Team Profiles

FACULTATIVE TEAM

Risk selection is key in Facultative reinsuranceBy Michael Gertsch

WHAT MAKES THE Facultative line of business so unique is its custom-made and sophisticated form of risk transfer

for larger, risk-managed projects, and the way it addresses certain peak risks. Each risk is placed on a case-by-case basis and its exposures are different. Given the significant volatility, it is a line which requires a high degree of technical underwriting skills and local expertise as well as insight into industrial processing in order for underwriters to have an in-depth understanding of the risks being assessed and priced. Therefore, individual risk analysis is more important than price and risk selection is key. In addition, very close relationships with clients and brokers are essential, to source the accounts that have been identified as targets.

Stagnating economies, especially in the Eurozone, the US and China, present the biggest challenge, says Michael. With a lack of countries’ interest in investing in new and large scale construction projects, for example, he also sees limited short-term opportunities in the Energy production sector with pressure coming from emerging economies’ needs for infrastructure developments, mainly power and water. Significant overcapacity in the market and fierce competition among market players, especially on the broker side, add to the uphill battle. As a result, insurers and reinsurers are

faced with continuously reducing profit margins. While terms and conditions are continuing

to be under pressure, there is also a trend to a much stricter and more effective risk management with an increasing number of insureds. These initiatives are not purely driven out of cost-saving benefits on premium spend but are directly linked to an increased awareness of the competitive disadvantages that are created as a consequence of production outage. Such measures have a direct impact not only on the underlying loss frequency but also on the probability of a major event and therefore have a much bigger impact on expected profitability than increasing rates on sub-standard risk quality accounts. Another factor influencing the development of this line of business is the need for a diversification of reinsurers’ capital and securities across different economic environments in order to increase resilience to individual financial stress scenarios.

Going forward, the market environment for facultative business will continue to deteriorate in the short run. However, the facultative market will move back to more technical and less volume-driven underwriting in the mid- and longer term.

“The facultative business is an important cornerstone in supporting Qatar Re’s continued

diversification efforts. Despite the most competitive environment ever, we are committed to building a sustainable book of business based on technical and product expertise,” says Michael Gertsch, Head of Global Facultative.

“ The facultative business is an important corner-stone in supporting Qatar Re’s continued diversification efforts. Despite the most competitive environment ever, we are committed to building a sustainable book of business based on technical and product expertise...”

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Peter Bitterlin, Head of Energy, Zurich

Peter Bitterlin was the first employee to join Qatar Re’s Zurich Branch in September 2012 and also acted as Qatar Re’s Branch Manager during the start-up phase. Prior to joining Qatar Re, Peter was working as an insurance consultant for AIG in Zurich.

He looks back on 30 years of underwriting experience in both Energy and Industrial Property business and was a Senior Underwriter at Partner Re in Zurich for 13 years. Between 2009 and 2011 Peter led the Global Energy team at XL Insurance in London.

Fulvio Cimino, Senior Underwriter Property Fac, ZurichFulvio Cimino joined Qatar Re on December 1 2014, from Pacific Hydro Chile where he was Risk Manager and Global Insurance Manager, and nominated among the Top 10 Risk & Insurance Managers 2013 in Latin America by ‘Latin America Insurance

Review’. Prior, he led the Latin America Market strategy team and was a Global Construction underwriter at Torus Insurance. Fulvio has over 15 years of insurance experience and has held various international underwriting positions among others at Zurich Global Energy focusing Europe and Latin America, as Corporate Customer Manager for Zurich Financial Services in Chile as well as from Infrassure where he specifically managed the US market for industrial clients.

Figen Lipley, Senior Energy Fac Underwriter, ZurichFigen Lipley is a senior energy underwriter, chemical engineer and risk management specialist. She was Chief Engineer at Arch Insurance in London before joining Infrassure as a Senior Underwriter in the Onshore Energy team in Zurich. Prior, she

worked at ACE London and FM Global UK. Through her 20 years in the insurance industry, of which she spent 15 years in London and 5 years in Zurich, Figen has built a strong network of brokers, insurers, reinsurers and Energy clients.

Jochen Ziegler, Underwriter Property Fac, Zurich

Jochen Ziegler joined Qatar Re in October 1, 2014. Prior to Qatar Re, Jochen spent 8 years with Swiss Re in Zurich, holding underwriting positions in both treaty (Swiss Market and Global Accounts) as well as in facultative (London market). Prior, Jochen worked

in Product and Strategy Development on various projects, among others on a Group-wide strategy project which was an integral part of the realignment of Swiss Re after the financial crisis in 2008.

Jose James, Underwriter Non Energy Fac, Doha

Jose James joined Qatar Re in January 2011 as an Underwriting Assistant and quickly became a full-fledged underwriter. Jose is a Fellow from the Indian Insurance Institute and has completed Certificate levels from CII London.

Sriram Pappu, Senior Underwriter Energy, Doha

Sriram Pappu joined QatarRe 3 years ago. Prior to Qatar Re, he was with Marsh in India for 5 years in the Energy, Property and Marine practices. Prior, he worked with TATA AIG, India, for 5 years as a marine cargo underwriter. He is an ACII and an Associate

member of the Association of Average Adjusters.

Sachin Samuel Valappil, Underwriter Energy, Doha

Sachin Samuel Valappil joined Qatar Re in October 2008 as an Underwriting Assistant and quickly became a full-fledged underwriter. He worked briefly as a Consultant for Dale Carnegie Training prior to joining Qatar Re.

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STRUCTURED FINANCE

Structured Finance & Reinsurance at Qatar ReBeatrix Münger, Head of Structured Finance, Qatar Re

WE OFFER STRUCTURED FINANCE AND REINSURANCE for non-standard credit covers on a selective basis to our clients around the world. Our team analyzes and structures single and multi-line as well as multi-year transactions. We also extensively use actuarial, legal, accounting and

underwriting from across the company and the QIC Group. These structured reinsurance solutions and coverage risks are provided on a proportional and non-proportional basis.

We are keen to write the Structured Finance and Reinsurance lines, partly from a diversification point of view as it helps to manage the market cycles and partly in order to be able to serve specific client needs. Our clients receive tailor-made reinsurance solutions customized to their requirements and benefit from the team’s specific expertise. As it is still a small and flexible team it can offer short response times and alternative security coupled with uncorrelated capital, i.e. financial backing from a capital source outside the US and European markets.

Structured FinanceThe financial crisis of 2007/8 caused a lot of turmoil in the Structured Finance area. In the last few years the market has been slowly growing again. We offer reinsurance cover for business in the mortgage indemnity and financial guarantee sector, on a facultative and treaty basis.

Structured ReinsuranceThe growth and interest in Structured Reinsurance is primarily due to the value created by recognizing and formalizing a strong relationship between two parties and by aligning their interests that fall outside the domain of traditional reinsurance.

Beatrix Münger

Beatrix Münger joined Qatar Re in 2013 from Novae where she worked in Credit Risk Management. Prior, she held the position of Head of Financial Guarantee and Structured Reinsurance with PartnerRe. Originally she worked for Winterthur’s reinsurance department (Credit & Surety) where she got involved in special projects and non-standard transactions.

Dino Toniolo joined Qatar Re in 2014. Prior, he worked as a math professor in Zug, Switzerland and runs his own company for modelling financial risks and the development of derivative-based investment strategies. Dino Toniolo has two decades of experience in property reinsurance, motor liability insurance and actuarial finance working at Swiss Re and Winterthur Insurance.

Dino Toniolo

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On the occasion of the most recent MultaQa Qatar conference, the global reinsurance panel, moderated

by Jack Grocott, Publisher and Editor of GR & Strategic Risk, featured Gunther Saacke, CEO, Qatar Re, Reto Brosi, CEO, Asia Capital Re, Farid Chedid, Chairman & CEO, Chedid Capital, Corneille Karekezi, CEO & Managing Director, Africa Re, and Bernd Kohn, CEO Africa & Middle East, Munich Re, who discussed the future prospects of the region’s

reinsurance markets in light of rapid global change.

During the session, Gunther Saacke expressed doubts over the longer-term viability of national and regional reinsurers in light of ever-increasing competitive, regulatory and

compliance pressures. In his view, a globally diversified book of business is a prerequisite for staying in business which is also why Qatar Re is ‘underweight’ in the MENA reinsurance markets. Local and regional reinsurers, in his view, will have to partner with stronger and more balanced players in order to survive, in particular as their home markets grow more capital-efficient. MultaQa Qatar is hosted by the Qatar Central Bank and the Qatar Financial Centre Authority. It attracts more than 700 senior participants from close to 40 countries.

Qatar Re CEO participates in MultaQa Qatar 2015 panel

[from left] Bernd Kohn, CEO Africa & Middle East, Munich Re; Gunther Saacke, CEO, Qatar Re; Farid Chedid, Chairman & CEO, Chedid Capital; Jack Grocott, Publisher & Editor, GR; Corneille Karekezi, Chairman & CEO, Africa Re; Reto Brosi, CEO, Asia Capital Re

MULTAQA QATAR 2015

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Since joining the QIC Group on December 1, 2014, Andy Ross, CEO of Qatar Insurance Company Europe Ltd, has been heading up the company’s new Malta office. He joined from QBE and has many years of experience in the (re)insurance

industry from working at Zurich Re, Converium and SCOR. With the establishment of the Malta office, Qatar Re’s parent, QIC Group, is broadening its footprint across Europe.

What is your specific role?

For the past couple of months I have been exclusively occupied with establishing the foundations for the new Qatar Insurance Company in Malta and ensuring its business readiness. So far, no two days have been the same and I am discussing new business opportunities, investigating regulatory obligations, checking capital requirements, analyzing the complexities of Solvency II, agreeing new

claims processes and IT systems and arranging Board meetings with our local third party administrator on a daily basis. I work with our Group’s professionals from underwriting, claims, finance, legal and compliance, as well as external tax advisors and auditors and of course the Regulator, Malta Financial Services Authority. With a largely claims background to date, it has been very refreshing and enjoyable to assume different responsibilities with a completely new venture, and it has been a great experience so far!

Why has Qatar Re’s parent company, QIC Group, established a subsidiary in Malta?

The establishment of Qatar Insurance Company Europe Ltd represents an important step forward towards the realization of the vision of QIC to become a leading global property and casualty and specialty insurance group. Qatar Insurance Company Europe Ltd will be a primary vehicle for the Group to expand its business in the EU and will be able to leverage the Group’s strong relationships with leading insurance industry participants. Malta proved to be an attractive location for QIC’s insurance entity in view of its robust economy, sound banking system, skilled workforce and existing insurance industry infrastructure. The local regulatory environment and the Malta Financial Services

Authority’s reputation for pragmatism were also significant factors.

What is Qatar Re’s involvement?

Qatar Re provides underwriting, claims and marketing services to Qatar Insurance Company Europe Ltd whereas QIC delivers other support services

such as compliance, risk management, internal audit, actuarial and IT. Qatar Re’s CEO Gunther Saacke and Sunil Talwar, Deputy CEO, QIC are both Board

members of Qatar Insurance Company Europe Ltd.

Since when has it been in operation?

Qatar Insurance Company Europe Ltd received its authorization towards the end of last year and so a lot of the hard work had already been done before I arrived! We

primarily work through a local insurance manager to administer the operations, but also have tremendous support from both QIC professionals in Doha and Qatar Re staff in

Zurich. There is a strong team spirit as well as a collaborative and entrepreneurial ethos within all entities.

INTERVIEW WITH

Andy Ross CEO of Qatar Insurance Company Europe Ltd

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What lines of business do you write?

The first two pieces of business to be written by Qatar Insurance Company Europe Ltd involved multiline package policies for Commercial businesses and SME’s as well as Bloodstock and Pet insurance predominantly in the UK. Our current business model is to write business through Coverholders – an arrangement whereby Qatar Insurance Company Europe Ltd delegates authority to a limited number of approved organisations who enter contracts of insurance, issue policies and handle claims on our behalf, always within predefined parameters. Coverholders have considerable expertise in niche products and regions and can write a wide range of specialist classes without the need for establishing expensive operational infrastructure. The model has proved so attractive to the market that we recently submitted a license extension application to the Regulator; subject to approval, Qatar Insurance Company Europe Ltd would be authorised to write all classes of insurance and reinsurance business throughout the EEA.

What are the advantages of having an office in Malta?

With current market conditions in the reinsurance arena, a number of business opportunities have been identified within the EEA which could be accessed with the benefit of an insurance rather than a reinsurance entity. Those opportunities are founded upon a few key strategic partnerships with experienced Coverholders as mentioned above. Although the Regulator requires some local retention in Malta, a large proportion of that income is reinsured on a quota share basis back to Qatar Re adding an extra dimension to the Qatar Re balance sheet.

How does that benefit the company’s clients?

Based on our experience to date, Coverholders writing niche, specialist business greatly value the “A” rated financial strength of Qatar Insurance Company Europe Ltd. They also welcome Qatar Insurance Company Europe Ltd’s ability to offer a rapid and flexible response to multiline business opportunities and to engage highly committed internal experts, working to develop and deliver creative solutions for brokers and clients. Due to their complex set-up and internal processes, many larger and more established insurance entities would struggle to match the speed, technical analysis and levels of service support which we can deliver.

Where do you see the mid- to long-term perspective?

In the long-term it is my strong desire that the foundations being established now will enable Qatar Insurance Company Europe Ltd to become an established and respected insurer in Malta and across the EEA whilst at the same time playing an important part within the QIC Group in consistently delivering profitable results and enhancing shareholder value.

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2014 RESULTS

Qatar Re reports strong financial results in 2014

On April 20, 2015 QAtAr Re announced its full year 2014 results with gross written premiums having increased by

60% to USD 536 million, net income came in at USD 16 million, up from USD 0.5 million, and investment income grew by 40% to USD 27 million.

Building on a diversified book of business

In 2014 Qatar Re grew its portfolio to gross written premiums of USD 536 million, an increase by almost 60% from USD 337 million in 2013, already benefiting from its broad diversification which it had sought since its repositioning as a global reinsurer. Qatar Re focuses on knowledge-intensive specialty business, which it pursues through strong teams with acknowledged technical expertise and longstanding experience in the industry. As a result, the Company already assumes lead positions on select panels.

The net underwriting result came in at USD 27 million, compared with USD 11 million in the previous year. The technical margin on its net premiums written, after significant intra-group cessions, increased from 8% in 2013 to 15% during the reporting period. Furthermore the portfolio’s diversification continued to improve. The combined share of the three largest classes—motor/casualty, property and agriculture—decreased from 75% to 61%.

In the past year, Qatar Re’s North American business has grown considerably as the Company’s Bermuda branch became fully operational. The Americas now account for 24% of the total portfolio, up from 14%. By contrast European business decreased in share from 52% to 48%.

The investment result of USD 27 million, representing an excellent return on investment of 9.6%, contributed favourably to Qatar Re’s results. Total investments amounted to USD 415 million, as compared to USD 385 million in 2013. Total available for sale financial assets increased from USD 179 million in 2013 to USD 285 million in 2014.

This includes Qatari public shareholding companies, quoted shares, and bonds, minus margin collateral. Overall, Qatar Re’s asset allocation, with almost 70% held in fixed income securities, cash and deposits, is commensurate with its A-rated financial strength rating and elaborate Enterprise Risk Management framework.

In line with the Company’s expansion plans, Qatar Re’s headcount grew to 107 as per December 31, 2014. With additional scale, cost-efficiency also improved. Measured against gross written premiums, the administrative expense ratio reduced from 8.8% to 7.1%. The Company expects this trend to continue in 2015.

Net income amounted to USD 16 million, up from USD 0.5 million in the previous year. This improvement needs to be set against a backdrop of investments in staff and infrastructure as well as prior-year underwriting losses unrelated to Qatar Re’s current portfolio.

As in the previous year, Qatar Re will retain its 2014 earnings, further bolstering its capitalization.

Momentum to be maintained in 2015

Qatar Re expects to generate further profitable growth in 2015. The Company is convinced that reinsurance buyers will continue to welcome a well-diversified and technically versatile reinsurer backed by long-term capital.

Qatar Re recently received approval from the Monetary Authority of Singapore to establish a representative office in Singapore that will focus initially on exploring business opportunities in the Asian region. Micky Lee, a renowned industry veteran, has been appointed to act as the Singapore representative of the office. Mr. Lee joins from Asia Capital Re (ACR) where he last served as Chief Underwriting Officer Treaty. Previously he was ACR’s Head of Property. Prior, Micky Lee was a Property and Engineering Underwriter for Swiss Re’s South East Asian markets.

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Qatar ReView

DohaQatar Reinsurance Company LLC8th Floor, QIC BuildingTamin StreetWest Bay AreaP.O. Box 24938Doha, Qatar

ZurichQatar Reinsurance Company LLC, Doha, Zurich BranchBleicherweg 728002 ZurichSwitzerland

BermudaQatar Reinsurance Company LLC, Overbay106 Pitts Bay RoadPembroke, HM08 Bermuda

LondonQatar Reinsurance Company LLC, Representative OfficeSuite 2/10 London Underwriting Centre3 Minster CourtMincing LaneLondon, UK, EC3R 7DD

www.qatarreinsurance.com

April 2015—ImprintPUBLISHER: Qatar Reinsurance Company LLC, Doha, QatarCONCEPT & TEXT: Dr. Schanz, Alms & Company Ltd, ZurichDESIGN: Alan Booth, www.calixa.biz