The 2008 financial collapse sent seismic waves across the banking and global insurance industries. As a result, bond underwriting, a service that processes public issuances and delivers securities, suffered a general decline. Over the last few years, however, this segment of the market has seen a revival, with interest burgeoning – particularly across emerging markets. Perhaps the biggest catalyst for this shift has been the growing trend for large infrastructure projects across Latin America and the Middle East.
One firm that managed to maintain a steady level of activity throughout the crisis was Panama-based Barents Re. With bond underwriting as its core business, the firm has continued to expand across Europe and MENA, capturing the huge potential of key markets shifting from financial guarantees provided by banks to surety bond insurance. In the midst of this transition, European CEO had the opportunity to speak with Gerardo Garcia, CEO of Barents Re, about his development strategy and what he expects for the future.
How has the market for surety bonds changed?
In recent years, there has been increasing interest in this line of business, which has resulted in an expansion of client relationships and premium volume. This attention is the product of large investments in infrastructure projects across various territories; examples include the Olympics in Rio, the Panama Canal, the FIFA World Cup in Qatar, and the Expo in Dubai.
The big players in the reinsurance industry, who had to reduce their capacities during the financial crisis, are now keen to reactivate and expand their presence in Latin America, in addition to exploring new opportunities.
Barents Re, on the other hand, did not change its appetite during the financial crisis, so, unlike others in the market, it maintained its consistent underwriting approach, thus pioneering innovative reinsurance solutions and forging partnerships in new territories.
How has Barents Re expanded its competencies in this area?
Barents Re has established two hubs in order to service its clients internationally: one can be found in Panama, which delivers reinsurance for Latin American contractors, while the other in Spain provides a base for servicing contractors from Europe, across to the Middle East and Latin America, thanks to the enthusiastic efforts of our office in Beirut.
The group also has two specialised offices in Italy – in Rome and Milan – in order to assist the local market, which we have found to be the most competitive and challenging in the continent. In terms of prospective new markets, we see great potential in Africa, where we are very likely to develop our bonds activities in the forthcoming years.
How would you define your current strategy?
We are very confident that the quality of our service has been key in demonstrating to international construction and engineering companies that we can fully support their ambitions and grow together. With this model in place, our strategy has mainly been developed in accordance with the needs of these companies – our partners. In that vein, we carefully prepare in areas where we expect large infrastructure investments to take place in the imminent future.
At Barents Re, we are keen to consolidate our position, both in terms of bringing more companies into the fold and in terms of the markets that we operate in. We are confident in our ability to do so, given our remarkable capacity and expertise; with this foundation we will continue to push forward to make our business as profitable as possible.
What are your plans for the future?
We plan to improve our internal processes in order to further enhance customer experience. We also see growth potential in existing countries, and new territories in the GCC and Africa.
We have also made plans to increase the number of underwriters we have, as well as the resources we have in place for loss prevention and claims management. Overall, we are working to reinforce, develop and enhance our core aims in specific markets, so that we successfully maintain our current growth rate.