Healthy underwriting results & robust investment income support Asian reinsurers’ earnings: AM Best

Asian reinsurers are actively expanding to mature overseas markets to diversify their portfolios and improve cycle management, a move seen by credit rating agency AM Best as credit positive.

According to a recent AM Best report, many reinsurers in Singapore and across South and Southeast Asia reported strong earnings in 2024, supported by healthy underwriting results and robust investment income, amid elevated interest rates and a relatively benign catastrophe environment.

Data from the Monetary Authority of Singapore (MAS), reveals that Singapore-domiciled reinsurers recorded approximately SGD 1.1 billion (USD 0.8 billion) in underwriting profits from Offshore Insurance Fund (OIF) business in 2024, which was largely in line with 2023.

Regional reinsurers operating outside Singapore but writing Association of Southeast Asian Nations (ASEAN) and other international business also saw solid earnings, bolstered by the cumulative effect of market corrections in recent renewal cycles.

“While performance remained resilient in 2024, some competitive pressures are beginning to emerge, potentially constraining future earnings growth, particularly as pricing momentum softens in better-performing segments,” the AM Best stated.

Retrocession renewals in 2025 were largely stable, with pricing showing moderation. Improved underwriting performance and more disciplined accumulation management by reinsurers led to more favourable terms, particularly for reinsurers with diversified portfolios, robust underwriting controls, and good loss histories.

Additionally, retrocession markets continue to favour named-peril covers, and are showing limited appetite for multi-region covers, seeking to better manage risk accumulation and avoid adverse selection.

These dynamics contributed to the overall stability of reinsurance market pricing, particularly in segments not directly impacted by large losses, according to the report.

In 2025, most reinsurance programs in the region were renewed on an as-expiring basis. However, some cedents opted to purchase higher reinsurance limits. This decision was influenced by catastrophe losses that exceeded previous model predictions, higher net retentions imposed in recent renewals, and an increase in insured sums due to inflation and property value appreciation.

This trend, analysts noted, indicates a continued effort by policyholders to manage peak accumulations, thereby safeguarding their capital.

AM Best added: “Improved underwriting margins and sustained pricing adequacy have attracted fresh capital and encouraged existing players to deploy more capacity in selected markets in this region. This has led to heightened competitive pressure, particularly within upper layers of risk programmes and better performing treaties. Notably, several cedents in Southeast Asia and India reported significant treaty over-placements during 2025 renewals.”

Concurrently, downward pressure on reinsurance rates persisted during the 2025 reinsurance renewals, a reversal of the firming trend seen in prior cycles.

Across various regional markets, including Southeast Asia, India, Australia, and New Zealand, rates have largely declined or remained unchanged, potentially signalling a transition toward a more capacity-rich, softening phase, suggesting that margins may be approaching a cyclical peak.

While there has been broader rate softening in well-performing segments, pricing for programs affected by losses and those exposed to catastrophes remains firm or is increasing. This reflects reinsurers’ approach of selective, risk-based pricing.

A series of regional catastrophe events in 2024 and 2025 have reinforced a cautious approach among reinsurers, tempering expansion ambitions and prompting a more selective deployment of capacity, the report highlighted.

“While these events triggered material losses and significant operational disruptions, the impact on reinsurers was relatively contained, largely due to higher attachment points and tighter terms introduced over recent renewal cycles,” analysts explained.

Adding: “As a result, ceding companies have continued to absorb a larger share of losses, reflecting a structural shift in risk-bearing between primary and reinsurance markets in the region.”

A notable recent development was the June 2025 crash of an Air India aircraft, which is expected to be one of the largest aviation losses in the region in recent years.

This incident, following a global uptick in high-level severity aviation losses, is likely to lead to tightened terms, narrower coverage and reduced capacity in the aviation reinsurance market, according to the report.

AM Best also noted that reinsurers in the region are increasingly integrating climate risk into their underwriting decisions, driven by the rising recurrence of weather-related events.

This provides more robust data for catastrophe modelling, allowing for more confident pricing.

Recent major weather events, such as Typhoon Yagi in 2024, while widespread flooding in Thailand and India, and frequent typhoon landfalls, including Typhoons Trami and Gaemi in the Philippines, have kept pressure on pricing and capacity.

Against the backdrop of tighter reinsurance conditions and more limited appetite for weather-related events, the Australia Cyclone Reinsurance Pool has emerged as a stabilising mechanism to help alleviate capacity constraints and reduce pricing pressure in cyclone-exposed regions, particularly in Northern Australia.

Its success is now being seen as a reference point for other catastrophe-prone markets, such as the Philippines, where a similar facility is under development.

Recent regulatory reforms in India have also facilitated an increase in reinsurance capacity, leading to a more competitive marketplace and smoother renewals.

A new regulatory development granting the International Financial Services Centre Insurance Offices (IIO’s) in GIFT City parity with Foreign Reinsurance Branches (FRB’s)has boosted foreign reinsurer participation.

“As a result, foreign reinsurers are playing a more active role in both treaty and facultative placements, contributing to more competitive pricing and, in some instances, over-subscription of select treaties, despite collateral-related constraints associated with cross-border reinsurers,” said AM Best.

Concluding: “Recent natural disasters have prompted insurers to seek higher reinsurance limits to support greater capital protection. Facultative solutions are also used for more complex risks to fill protection gaps.

“As regulatory frameworks across Southeast Asia continue to evolve and mature, the strategic role of reinsurance is expected to deepen. Reinsurance is increasingly viewed as a critical capital management tool, supporting not only solvency and portfolio optimisation, but also facilitating compliance with local and regional regulatory standards.”

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