Leading Asia-Pacific Reinsurers Deliver Steady Returns Amid Increasing Competition and Uncertainty – InsuranceNewsNet | Business Insurance

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Important Pacific Asia Reinsurers maintained the ability to deliver stable operating and return on capital ratios in 2021, with average annual net premium growth of nearly 10% in the most recent five-year period, according to a new I am better report.

The new Best Market Segment Report“Pacific Asia Major reinsurers deliver stable returns amid growing competition and Uncertainty,” is part of AM Best’s month-long look at the global reinsurance industry ahead of September’s Rendez-Vous. Monte Carlo. Based on the operational performance of a group of selected Pacific Asia domiciled reinsurers that are among the 50 largest reinsurance groups globally, according to AM Best calculations, 2022 is shaping up to be another profitable year thanks to benign natural catastrophe activity in the region in the first half of the year. Price boost in most Pacific Asia Markets are also expected to strongly support premium rate increases for the 2023 renewal seasons, given recent years of underperformance and reduced retrocession capacity in the global reinsurance market.

the Pacific Asia the five-year average return on compound equity (2017-2021) is 5.8%. While the loss ratio shows an increasing trend, it is offset by a declining expense ratio, resulting in a stable combined ratio that has hovered around break-even. According to the report, investment returns have also remained stable.

“Most of the reinsurers in the composite have benefited from strong economic growth in their home markets, by providing capacity to cedants for capital relief through proportionate treaties with loss-absorbing features, which has led to lower ratios. stable combinations,” he said. christie lee, senior director of AM Best. However, the investment portfolios of many major regional reinsurers lack geographic diversification, and investment returns are highly correlated with local market capital market volatility.

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The accumulation of risks of natural catastrophes in Pacific Asia Reinsurers’ home markets remain a significant risk, but AM Best notes that the region’s reinsurers have struggled for years to diversify growth and are now reaping the benefits of business profiles that are more balanced between domestic and regional contributions. foreign companies, as well as life and non-life business.

“Diversification improves return stability, cost of capital and price competitiveness,” Lee said.

AM Best believes that capacity in the insurance-linked securities (ILS) market can also help regional reinsurers capture rate tightening opportunities. the governments of Singapore Y Hong Kong they are willing to leverage their positions as financial powerhouses to develop their respective alternative capital markets for ILS issuance. From an investor’s perspective, catastrophe bonds that cover AsiaILS-based risks present an attractive alternative for institutional investors looking to diversify their existing portfolios, as current ILS issuances are largely focused on U.S and European risks. However, investors will need to better understand Asian risks and prices, as well as the interpretation of catastrophe model results.

Leading Asia-Pacific Reinsurers Deliver Steady Returns Amid Increasing Competition and Uncertainty – InsuranceNewsNet | Business Insurance Allianz 728x90 2022 08

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=323398. During the months of August and September, before Rendez-Vous in September. A short video interview about this report can also be viewed at http://www.ambest.com/v.asp?v=ambglobalap922.

Finally, AM Best will hold its annual reinsurance market briefing at Rendez-Vous de Septembre on September 11 at 10:15 (CET)in the Hotel Hermitage in Monte Carlo. For more information please visit http://www.ambest.com/conferences/rmbrvs2022/index.html.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Based in the United StatesThe company does business in more than 100 countries with regional offices in London, amsterdam, Dubai, Hong Kong, Singapore Y Mexico City. For more information visit www.ambest.com.

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Copyright © 2022 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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christie lee
Senior Director, Analytics

+852 2827 3413

[email protected]

Christopher Sharky
Manager, Public Relations

+1 908 439 2200, ext. 5159

[email protected]

jeff mango
Managing Director,

strategic communications
+1 908 439 2200, ext. 5204

[email protected]

Source: AM Best