Front Street Re's new CEO, Edison Fong, develops 'reinsurtech'

May 29, 2024 4:00 PM

Edison Fong, named CEO of Front Street Re in May, brings experience as an actuary working with life insurance and annuities to the role. In a previous role in the Toronto office of Manulife, he led a global team with members from Hong Kong, the U.S. and Canada, on work including compliance with the International Financial Reporting Standards (IFRS 17). Fong connected with Ian Lim, founder and CEO of Lexasure Financial Group, an insurtech and fintech company that is also the parent of Front Street Re, leading him to take the role. Digital Insurance spoke with Fong about his plans to bring his global perspective to the reinsurer's plans for growth.

The conversation has been edited for clarity.

What did you bring to Front Street Re from your past experience with technology for life insurance and annuities?

In the actuarial space, that is usually a natural progression. Moving from insurance to reinsurance makes sense, because when you're in an insurance role, first you understand the product from the direct side, because the clients of insurance companies are the consumers, the public. You get first hand exposure to what a product looks like. If I'm selling a life insurance policy, people ask about the product features. As an actuary, we need understanding of how the product features work, because the main job of an actuary is to price the product. To price that, you need to know how the features work, so that you're able to put that into your models.

Then you can do the cool stuff. You could project the liabilities with your models. You could put in assumptions. That's the real job of actuaries. That's pricing. Then you have valuation, which is reporting. When you sell this business or when you plan to sell the business, you need to hold reserves to make sure that claims are adequate, that you will be able to make claim payouts that are adequate in the future. That's calculating reserves based on the actuarial assumptions.

What have you been working on so far with Front Street?

As the CEO of this company, there's managing the day to day. When we get into deals and discussion of requests for proposals to review, we'll look at our actuarial pricing to make sure that the deals make sense, before we sign the deals. I've been talking to so many people. We're looking to grow the team. On the hiring side, I've been meeting with our legal team just as an introduction. I've been meeting with our asset managers in New York as well. It's really all facets of the road that I've been working on. It's a pretty intense schedule, but it's fun. I find it fun.

As a reinsurer, one of our primary goals is to provide reinsurance as a service. Our primary clients are insurers and carriers. One of our primary goals is to come in and provide the capacity and the ability for these insurance companies to continue growing, provide the capital they need as a reinsurer.

We're also talking about partnership opportunities with insurtech companies, and also investment opportunities. Lexasure has a long history of partnering and investing in different firms -- healthtech, insurtech, or even agriculture, agritech firms.

How is digital transformation advancing for reinsurance?

A lot of the insurtech companies in the past few years or the past decade, have been focused on the B2C side, providing services to the insurance carriers, the MGAs or the distribution channels. Most of them tackle solutions from the entire value chain of the insurers. From underwriting to pricing, to claims management, to fraud detection, and so on, or just offering bespoke insurance solutions, reinsurance has not gotten through much of that exposure. Reinsurance is just a much more complicated business. It's more black box. It's behind the wall for a lot of folks out there.

There's still a lot of potential. Reinsurance is ultimately getting into a contract with the insurance company, where essentially they transfer the risk of their business to us. One big part of our reinsurtech is to streamline that process between the insurance company and reinsurance company. I've also seen reinsurtech companies out there helping to streamline and automate deals.

These are the potential areas for growth for reinsurance. Essentially it's still a business model that is complicated. It's not easy for your traditional entrepreneurs to tap into. But with the right partnership, if we can bring in and bridge the right expertise, like for example, reinsurance experts or actuaries who have been in a reinsurance business, with these entrepreneurs, then we can create successful reinsurtech business models.

Do P&C or life insurtech professionals need to know more about what's in the reinsurance black box or understand it better?

100%, I think so. It is also one of my goals coming in to educate the public about reinsurance. Because it's a black box, so the more people know about it, it might just get people to be curious and be willing to explore more and to provide tech service, digitization and automation.

What do you think the big hurdles are?

There are many competitors out there. It's important for us to differentiate ourselves. Front Street Re, having that advantage and exposure in insurtech, and having that international exposure coming from Asia and now with a North American footprint, that's where we really differentiate ourselves. When we get into discussions with our partners, we want to be able to say, 'Hey, let's start a relationship.'

I'd like to be able to say, if in the future or down the road, if you'd like to explore growing in the Asia market, or even getting insurtech to help streamline your operations, make your life easier, we'd like to provide that service. That's really how we like to differentiate ourselves. A lot of the competitors here are in the domestic market. We're coming from an international market.