South and Southeast Asian reinsurers improve underwriting performance, but challenges remain – InsuranceNewsNet

AM Best notes that reinsurance companies in the South and South East Asia (S/SEA) posted an improved combined ratio in 2021, although underwriting performance remains under pressure with continued reliance on investments to achieve bottom line profitability.

New Best Market Segment Report“Addressing Elusive Cost of Capital for South and Southeast Asian Reinsurers Despite Improved Underwriting Performance,” is part of AM Best’s month-long review of the global insurance industry. reinsurance before the September Rendez-Vous in Monte Carlo. According to the report, S/SEA reinsurers recorded an overall combined ratio of 108% in 2021, an improvement of five percentage points from the recent peak in 2019. Despite the improvement in technical performance, AM Best notes that the yield overall equity has decreased. to 3.4% in 2021 due to weak investment returns in a prolonged low interest rate environment in most S/SEA markets.

“Although investment returns are expected to rise in the near term alongside a recovery in interest rates, rising inflation in the region is likely to pose challenges to meeting the cost of capital looking forward,” he said. declared Kanika Thukralsenior financial analyst, AM Best.

AM Best continues to expect the segment to experience steady growth, supported by expanding primary insurance markets with the economic recovery and increased insurance penetration. Alongside local and regional reinsurers, international reinsurance players have supported the development of S/SEA reinsurance markets as they see the region as key to their growth and portfolio diversification strategies. In particular, international reinsurers remain essential to cover major real estate, technical and maritime risks.

The report notes that reinsurers in the region have approached 2022 renewals with an emphasis on technical profitability, due to expectations of a challenging investment landscape and an inflationary environment. The trend of tightening retrocession prices continued for loss-making accounts; however, S/SEA reinsurers have not significantly changed their retrocession strategies and continue to rely on traditional forms of retrocession, despite rising costs. Instead, market participants have sought to focus on prudent exposure management while maintaining or moderately increasing retention levels given these retrocession conditions.

“Even with pricing improvements over the past two renewal seasons, price increases may not be sufficient to see significant improvement in technical profitability given the expected increases in loss costs if higher inflation persists,” said Michael Dunckley, director, analytics, AM Best. “Reinsurers will need a prudent investment and retrocession strategy, as well as continued underwriting discipline.”

To access the full copy of this market segment report, please visit Additional reports, including AM Best’s annual ranking of the world’s top 50 reinsurance groups and in-depth analyzes of the insurance-related securities, Lloyd’s, life/health and regional reinsurance markets, are available . Additionally, a short video interview on this report can also be viewed at

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Based at United Statesthe company operates in more than 100 countries with regional offices in London, amsterdam, dubai, hong kong, Singapore and Mexico City. For more information, visit

Copyright © 2022 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Kanika Thukral
Senior Financial Analyst

+65 6303 5023

[email protected]

Christopher Sharkey
Manager, Public Relations

+1 908 439 2200 ext. 5159

[email protected]

Michael DunckleyCFA

Director, Analytics

+65 6303 5020

[email protected]

Jeff Mango
General director,

Communications Strategy

+1 908 439 2200 ext. 5204

[email protected]

Source: AM Best

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