AM Best: Favourable Rating Changes For APAC (Re) Insurers Despite Geopolitical Uncertainty

KUALA LUMPUR, Sept 23 (Bernama) -- AM Best in its new report revealed that long-term issuer credit rating (Long-Term ICR) upgrades exceeded downgrades for its rated Asia-Pacific (APAC) (re)insurers in 2023, driven predominantly by improved balance sheet strength and favourable operating performance.

“Mature markets generally have more stable economic conditions and insurers may face fewer underwriting risks due to better-established risk management practices, more-accurate actuarial modelling and a deeper understanding of market dynamics.

“At the same time, emerging markets typically have simpler insurance products, resulting in lower probability of adverse claims development, and low insurance penetration,” said AM Best senior industry research analyst, David Lopes.

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Its “Asia-Pacific Benchmarking: Positive Signs While Navigating Climate and Geopolitical Uncertainty” Special Report states that eight Long-Term ICRs were upgraded in 2023 with four downgraded on a range of factors, including falling Best’s Capital Adequacy Ratio scores and weakening operating results.

According to AM Best in a statement,  additionally, the global credit rating agency assigned 10 new ratings in the region during the year.

AM Best’s geographical rating coverage across Asia and Oceania is broad, and more than 75 per cent of its ICRs for APAC rating units carried a Long-Term ICR of “a-” or higher, with mature markets skewing more favourably than emerging markets.

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The report highlights dynamics at work in mature and emerging markets as well as compares various rating drivers and building-block assessments in aggregate on rated carriers in both markets.

Despite elevated catastrophe activity in recent years, most outlooks on APAC rating units were stable at year-end 2023, at 87 per cent, though a larger proportion of those stable outlooks were for companies operating in mature markets than emerging-market participants.

Of the outlook revisions that did occur in 2023, most were moved to positive from stable and on companies operating in mature markets; in particular, New Zealand and Singapore.

-- BERNAMA