Standard & Poor’s (S&P) says reinsurers in the Asia-Pacific region are well placed to develop their market positions, with most groups rated in the “A” bracket.

Outlooks remain mostly stable or have returned to stable from negative since the 2011 Thai floods, with only Thai Re – the lowest-rated regional reinsurer at BBB+ – still facing a negative outlook.

Asia-Pacific reinsurers are better positioned than those in other regions to withstand global competitive pressures such as increased capacity and lower pricing, S&P says.

“Local reinsurers such as Korean Re in South Korea or Toa Re in Japan tend to have significant market share, and they are better established, with more defensible competitive positions.”

Korean Re has 65% market share in property and casualty (P&C) and about 50% in life reinsurance.

Central Re and Thai Re hold sizeable market shares in Taiwan and Thailand respectively. Toa Re is Japan’s largest reinsurer for P&C and life.

“Long-established local reinsurers in Asia-Pacific have built solid relationships in their markets, where continuity of capacity is valued,” S&P says. “This has provided some resilience against new entrants or transient and opportunistic players, whose capacity is less certain.”

Local reinsurers often have better knowledge of their markets than global counterparts and can develop a deeper understanding of underlying risks. Their proximity to clients enables them to offer a better service.

However, catastrophe exposure in the region is significant and even local knowledge cannot protect against unmodelled risks, as was seen with the Thai floods and Japanese earthquake and tsunami in 2011.

Regulatory changes may offer opportunities for global reinsurers, S&P says.

“In South Korea, for example, reinsurers face considerable increases in regulatory capital charges, and China is also strengthening its regulatory metrics. We believe global reinsurers’ capacity may thus be welcome in these markets.”