Softer pricing could hit Asia-Pacific reinsurers’ profitability in the next two years, according to an S&P Global Ratings report.

“Ample traditional and alternative capacity will sustain pricing pressure through 2027, particularly for business with favourable loss experience,” credit analyst Judy Chen said.

“Cedants will also continue to seek broader coverage, testing reinsurers’ ability to preserve terms and attachment points.”

The report covers 15 reinsurers across China, South Korea, India, Hong Kong, Japan, Taiwan, Malaysia, Singapore, Indonesia, Thailand, Vietnam and the Philippines.

S&P predicts premiums for Asia-Pacific reinsurers will increase by 2%-4% annually over the next two years.

“Premium growth should remain modest, supported by domestic market expansion and measured diversification,” the report said.

“Expansion into more complex business and exposure to higher-risk assets, meanwhile, could increase earnings volatility.”

S&P says reinsurers it rates will maintain lower natural catastrophe exposure than global peers because they participate less in peak zones and generally have cautious cat risk appetites.

The report notes diversification could benefit reinsurers, if handled with discipline.

“Emerging risks related to electric vehicles, renewable energy, IT, AI-related exposures and data centres offer longer-term growth opportunities,” credit analyst Trupti Kulkarni said.

“However, limited loss data and potential correlation in accumulations will initially lead to cautious underwriting, tightly defined coverage and relatively low limits.”

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