, Philippines

Philippine non-life outlook to remain stable: AM Best

Strong growth in different non-life segments underpinning stable outlook.

The Philippines non-life segment is maintaining a stable outlook supported by premium growth and improved investment conditions in 2021, according to ratings firm AM Best.

According to AM Best’s Market Segment Outlook: Philippines Non-Life Insurance report, strong growth experienced in microinsurance, improving affordability of insurance products, and increase insurance penetration are underpinning the stable outlook.

As of September 2021, gross and net premiums written by Philippine non-life insurers for the nine-month period had increased by 11.9% and 7.6%, respectively to $1.2b and $700m, compared with the same period in the previous year. In addition, government programs such as the “Build Build Build” programme, which consists of more than 20,000 infrastructure projects nationwide, has resumed and is expected to drive the Philippines’ economic recovery. It is also likely to act as a catalyst to the long-term growth of the property, construction and engineering insurance segments. 

However, AM Best warns that uncertainty surrounding the pandemic will continue to challenge non-life insurers in the Philippines. Nevertheless, non-life insurers have made progress in adapting to the current environment by bolstering their infrastructure and enhancing digital capabilities to be able to operate in a remote manner.

Additionally, as part of pandemic-fueled fiscal stimulus measures in the Philippines, the country maintained a historically low interest rate which constrained insurers’ investment results. However, interest rates are expected to rise in the coming year, and unrealised losses from the rising bond yields could impact insurers’ economic capital, depending on the companies’ asset-liability matching positions.

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