Asia-Pacific reinsurance sector stays stable despite soft market

The industry remains well capitalised, but Fitch cautions climate-driven volatility.

Asia-Pacific reinsurance sector’s soft market conditions are expected to put pressure on margins and increase risk-management challenges, according to Fitch Ratings. 

Whilst the market has remained stable so far, exposure to catastrophe events and regulatory changes could limit the softening trend.

Fitch said relatively benign catastrophe losses in early 2025 supported reinsurers’ profitability and stability. 

Combined with satisfactory performance in recent years, this has resulted in lower risk-adjusted pricing at recent renewals. 

However, the agency warned that climate change and severe weather continue to pose major risks to earnings and capital.

The industry remains well capitalised, but Fitch noted that climate-driven volatility underscores the need for risk transfer. 

It expects issuance of insurance-linked securities (ILS) in Asia to rise steadily, supported by fixed-income markets, stronger climate awareness, and regulatory initiatives encouraging catastrophe bonds and other ILS products.