APAC reinsurers see combined ratio improve to 91.6%

Many are also expanding internationally to boost profitability.

Asia Pacific (APAC) reinsurers achieved strong results under IFRS 17, with their composite return on equity (ROE) rising to 9.2% in 2023, compared to just 0.1% the previous year, according to AM Best. 

This improvement is attributed to a stable investment environment, benign catastrophe activity, and a recovery in both realised and unrealised investment losses. 

The combined ratio of the composite reinsurers also improved, reaching 91.6%, down by 2.9 percentage points from 2022.

Asian reinsurers, traditionally focused on property lines and proportional treaties, have not benefited as directly from global reinsurance rate increases. 

However, their operational stability remains strong, with many expanding internationally to boost profitability. Challenges persist in China, where post-COVID economic recovery remains weak.

Key drivers of improved performance include higher investment income due to rising interest rates and more disciplined underwriting. 

Going forward, Asian reinsurers are expected to diversify into liability, life/health, and specialty lines to manage reinsurance cycles better. Additionally, the report highlights a renewed interest in lower-layer reinsurance coverage in South and Southeast Asia, signaling growing confidence in rate adequacy.

AM Best also notes that Asian reinsurers are focusing on reducing catastrophe exposure and pursuing geographic diversification to maintain a robust capital position and mitigate climate risks.