KUALA LUMPUR (April 16): The growing frequency and severity of natural catastrophes have undermined the credit profiles of many non-life insurers in Asia-Pacific and highlighted the importance of more stringent risk management, according to Standard & Poor’s.
In a report entitled "Asia-Pacific Non-Life Insurance Outlook: Tighter Risk Controls Are Crucial As The Markets Continue To Grow, released on Monday, S&P credit analyst Paul Clarkson said the agency no longer had positive outlooks on any of the 12 non-life markets in Asia-Pacific that it covered.
"The pace of economic growth in the region is slowing and volatility in the investment markets have increased over the past few years.
“But most markets have sufficient fundamentals to warrant stable outlooks. For individual companies, capital levels may need strengthening,” said Clarkson.
The report said that the outlooks on Malaysia and China had moved to stable from positive, given the tougher climate.
S&P revised the outlook on Japan to stable from negative following the recent downgrades of insurers in that market.
For New Zealand, it said the change of outlook to stable from negative reflects the stabilization of insurers' financial profiles since the massive earthquakes in Christchurch in 2011.
“India and Japan have negative outlooks, given their poor underwriting losses due to underpricing and flood losses, respectively. The other markets are stable,” said S&P.
Clarkson said the increasing complexity of risks in Asia-Pacific supports calls for more stringent underwriting and risk controls. The region has a rapid build-up of assets that need protection.
“Tighter risk controls would help promote more profitable growth for regional non-life insurers," he said.
The report assesses the impact of recent catastrophes, examines the industry's growth prospects, and reviews each of the non-life markets.
In a report entitled "Asia-Pacific Non-Life Insurance Outlook: Tighter Risk Controls Are Crucial As The Markets Continue To Grow, released on Monday, S&P credit analyst Paul Clarkson said the agency no longer had positive outlooks on any of the 12 non-life markets in Asia-Pacific that it covered.
"The pace of economic growth in the region is slowing and volatility in the investment markets have increased over the past few years.
“But most markets have sufficient fundamentals to warrant stable outlooks. For individual companies, capital levels may need strengthening,” said Clarkson.
The report said that the outlooks on Malaysia and China had moved to stable from positive, given the tougher climate.
S&P revised the outlook on Japan to stable from negative following the recent downgrades of insurers in that market.
For New Zealand, it said the change of outlook to stable from negative reflects the stabilization of insurers' financial profiles since the massive earthquakes in Christchurch in 2011.
“India and Japan have negative outlooks, given their poor underwriting losses due to underpricing and flood losses, respectively. The other markets are stable,” said S&P.
Clarkson said the increasing complexity of risks in Asia-Pacific supports calls for more stringent underwriting and risk controls. The region has a rapid build-up of assets that need protection.
“Tighter risk controls would help promote more profitable growth for regional non-life insurers," he said.
The report assesses the impact of recent catastrophes, examines the industry's growth prospects, and reviews each of the non-life markets.
