TBY talks to Seyed Mohammad Asoudeh, Vice Chairman & Managing Director of Iranian Reinsurance Company, on its impact on the local insurance landscape and securing a greater share of the reinsurance market.

Seyed Mohammad Asoudeh
Seyed Mohammad Asoudeh received his MBA from the Morehead State University of Kentucky in 1979 and currently is the Vice Chairman & Managing Director of Iranian Reinsurance Company. He has served the Iranian insurance industry for more than three decades. Before assuming his current position, he was Managing Director of Alborz Insurance Company and Iran Insurance Company. He has also been the Vice President of Bimeh Markazi Iran. Asoudeh is a member of the High Council of Insurance, on which he represents the Iran Insurers Syndicate.

As the first public joint stock reinsurance company in Iran completely financed by the private sector, how has Iranian Reinsurance Company impacted the insurance landscape of the country?

Before our establishment, no private reinsurance company was active in Iran. We were the first company that brought private capital to the local reinsurance market. When we started our operations, we had two objectives. We wanted to introduce reinsurance for the local market and work with regional companies to access the international market. Soon after our establishment, however, sanctions were imposed on Iran by Western countries. Hence, we reasoned it was better not to accept reinsurance proposals from overseas, because in reinsurance a company is much more dependent on the international banking system for foreign exchange and currency transactions. We decided to slow down our international ambitions and focus on the local market. In Iran, we are now the third-largest player in reinsurance. Our market share in the reinsurance market is about 9%, which is satisfactory. We have a share in most Iranian reinsurance businesses. This is not a business where one can enter and leave when it suits them; the key to gaining market share is to commit to the customer, because some of the reinsurance commitments may last up to 10 years. This business is about the long run, and we realized it was better to refrain from engaging in international business until we had a clear view of the future and could obtain ratings from recognized international rating institutions. As a result, we have been able to build a strong network within Iran.

What is your strategy for securing a greater share of the reinsurance market, both in Iran and the region?

In addition to the problems that were related to sanctions, the market has experienced other challenges in the last three years. First, tariffs were lifted and rates were falling. There are certain lines of business that need more reinsurance, such as oil, energy, and aviation. These lines of business are extremely important for reinsurance companies such as ours. In these reinsurance-oriented lines of business, rates have fallen steadily as competition has increased. We are not greedy for market share; instead, we focus on getting the right shares of the market and giving professional advice for quality underwriting. Currently, we are satisfied being the third largest in the market.

How do you reflect on investor sentiment based on the interactions you have had so far?

We have an excellent structure of local shareholders and investors. In the future, we also need to have foreign investors and partners. We believe partnership with internationally well-known partners will be mutually beneficial as we know the market and they bring capital and know-how. Unfortunately, various unrest in the Middle East has elevated investment risks. The investment climate for reinsurance would benefit from stabilization. Prior to investments, we would like to see more business exchange. We are preparing ourselves to receive more foreign investors. We already have the plans and the potential. According to Iranian regulations, all properties in Iran have to be insured by Iranian companies. If foreign investors came, we can reinsure this part and have a partner overseas that provides them with services abroad. We can reinsure all the assets of foreign investors in Iran if we also have a foreign partner that can back the client in the international market. This will help us gain new customers and would assure investors that the end of their reinsurance is in the hands of a large global player. This is a great opportunity for us because we would be able to establish a joint venture with a leading company and facilitate investment in Iran. We are in close contact with these international firms; however, the greatest challenges we face are with banking and rating. Once these problems are overcome, better relations can be fostered.