Aon Benfield Study Finds Continuing Growth in Asia Pacific Region

Aon Benfield’s annual Evolving Criteria report, which reviews the latest developments in rating agency protocol and impact for the insurance industry in the Asia Pacific region, concludes: “The Asia Pacific insurance markets have slowly recovered from the significant losses they incurred following the series of natural disasters that impacted the region in 2011. The incidence of large scale catastrophes has since decreased, allowing insurers’ balance sheets to rebuild.”

The report also notes that strong economic growth is “contributing to an increasingly stable environment for insurers in Asia Pacific, albeit with growth rates in some regions that are below expectations.

“This stability is further supported by high premium growth expectations in regions with low insurance penetration rates, market liberalization, and an inflow of investments resulting from risk diversification from existing mature insurance markets to the developing markets.”

There are, however, some continuing negative factors as well; notably the “persistent low interest rate environment, tightened regulatory solvency requirements – which continue to put pressure on firms’ capitalization levels – and the possibility of an economic slowdown in China, which could affect many markets in the region.”

Rade Musulin, COO of Aon Benfield Analytics Asia Pacific, said: “These offsetting factors are evident in Standard and Poor’s five-year view of ratings actions across Asia Pacific, and create a level of uncertainty for the Asia Pacific insurance markets which makes operating conditions somewhat more difficult.

“However, whereas 2012 was dominated by ratings downgrades as a result of the 2011 catastrophic losses, 2013 has seen a rebound in upgrades, reflecting the re-strengthening of companies’ balance sheets.”

Source: Aon Benfield

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