Asia Pacific: Insurers will focus on investment risk as economic growth slows
Source: Asia Insurance Review | Apr 2024
Credit trends in the Asia-Pacific insurance sector remain steady, though prospects vary across regions, says S&P Global Ratings (S&P). Of the Asia-Pacific insurers S&P rates, 98% have a stable outlook.
In a report titled Asia-Pacific Insurance Sector Trends — Returning To Fundamentals As Undercurrents Unfold, S&P outlined the trends in the non-life and life insurance markets and the developments it expects to see over the next 12 months.
Other takeaways from S&P’s report are:
- With major central banks adjusting monetary policies, capital market volatility may rise. Insurers in Japan and Taiwan face risks of asset and foreign exchange movements, potentially affecting capital buffers.
- As economic growth slows, insurers will focus on investment risk oversight. Credit stresses, particularly in real estate and alternative investments, may lead insurers to reassess the risk-return balances and become more selective.
- As discussions on climate change and sustainable finance heat up, insurers face dual risks in underwriting and investments. Extreme weather events lead to increased claims, impacting earnings for P&C (re)/insurers, while higher reinsurance costs and growing catastrophe budgets further erode profits. A