APAC reinsurers out-earn global peers, set for further growth: AM Best

Domestic/national reinsurers throughout the Asia-Pacific region are beating global peers on profit metrics and may have the pricing and premium momentum lined up to continue well into 2023, analysts at  AM Best have suggested.

“Major Asia-Pacific reinsurers continue to deliver more stable operating ratios and return on equity in 2021 as compared to global peers,” analysts wrote of a composite reading dominated by Korean Re and China Re P&C.

OPEX controls have offset increases in claims loss ratios to keep combined ratios stable around the technical break-even point. Investment returns have likewise held stable to deliver operating ratios near the 94% mark.

Low nat cats to date in 2022 have done the trick to maintain the trend and pricing momentum looks capable of holding up at least half of the equation into 2023.

“2022 is shaping up to be another profitable year thanks to benign natural catastrophe activity in the region during the first half of the year,” analysts wrote of the state of play.

“Reinsurance pricing momentum in most markets is expected to firmly support premium rate increases for the 2023 renewal seasons, given the recent years of underperformance and retrocession capacity reduction in the global reinsurance market, particularly for retrocession aggregate coverage.”

From 2017 to 2021, reinsurers in the composite recorded annual average growth of 8.7% in net premiums written (NPW).

As the group of chiefly home market incumbent players works to diversify away from domestic nat cat concentrations, the home markets are not where that growth is being sought. Market shares are said to be “stable” on hone markets while growth is sought in foreign organic or via acquisitions.

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