Solid Underwriting Performance By Asia Pacific Reinsurers In 2022 - AM Best

KUALA LUMPUR, Sept 11 (Bernama) -- AM Best’s new report unveiled that major Asia Pacific reinsurance companies still managed to deliver strong year-over-year net premium growth of 8.1 per cent in 2022, despite a sharp increase in catastrophe losses outside their home markets and a challenging investment environment.

“With a higher cost of capital and a challenging investment environment in 2022, Asia Pacific reinsurers maintained their underwriting discipline in 2023 renewal to ensure a reasonable profit margin and adjust pricing in proportional treaties to improve performance.

“Primary insurers also followed this rule, aligning with reinsurance pricing, terms and conditions, which is expected to lead to better revenue and underwriting results for reinsurers,” said AM Best senior director, head of analytics, Christie Lee in a statement.

The Best’s Market Segment Report, “Operating Performance, Retro Cost Drive Asian Reinsurer Strategies”, is part of the global credit rating agency’s look at the global reinsurance industry in concert with the Rendez-Vous de Septembre in Monte Carlo.

Additional reports, including its annual ranking of the Top 50 global reinsurance groups and in-depth looks at the insurance-linked securities, Lloyd’s, life/annuity, health and regional reinsurance markets, are available at Best’s Research.

According to this report, which is based on the operating performance of a group of selected Asia Pacific-domiciled reinsurers that rank among the top 50 largest reinsurance groups globally, reinsurers sustained the ability to deliver stable operating and combined ratios in 2022.

The composite’s net income fell to US$166 million in 2022 from US$688 million in 2021, while return on equity also declined significantly, to 1.8 per cent in 2022 from 7.0 per cent. (US$1=RM4.67)

However, the combined ratio of reinsurers in the Asia Pacific composite improved slightly to 100.8 in 2022 from 101.1 in the previous year, lower than the five-year average of 101.0.

Although the absolute level of shareholders’ equity for the Asia Pacific reinsurers in the composite fell by 9.5 per cent year over year, the result was much better than the 38 per cent  capital decline seen for the European “Big Four” composite as monetary easing remains in some Asian countries.

Overall, the capital position of the major reinsurers in the Asia Pacific composite remains robust, and global expansion has contributed to diversification benefits to mitigate their inherent risk of domestic natural catastrophe risk accumulation.

-- BERNAMA