Asia reinsurers face lower premiums as capacity and capital expand: S&P

Catastrophe losses and capital market volatility remain key downside.

Maintaining underwriting discipline will be critical for reinsurers in Asia-Pacific as premium rates begin to soften amid rising competition, according to S&P Global Ratings’ latest report, Asia-Pacific Reinsurance Sector Update: Tiptoeing Through Uncertainties.

S&P credit analyst Trupti Kulkarni said the region’s underwriting margins are expected to come under pressure compared with global peers. 

“Asia-Pacific reinsurers’ underwriting margin gap versus global peers will likely further narrow over the next two years,” she said.

“That said, ongoing efforts to tighten risk selection and a supportive domestic book will aid broadly stable underwriting margins,” Kulkarni added.

The report noted that the sector faces growing challenges from ample reinsurance capacity and the increasing presence of alternative capital, both of which are expected to push premium rates lower.

S&P also warned that catastrophe losses and capital market volatility remain key downside risks.

Despite these pressures, the agency said reinsurers in the region are supported by strong domestic market positions, diversified business portfolios, and solid capitalisation.