September 5, 2011 / 11:34 PM / 8 years ago

TEXT-S&P Says Local Reinsurers Can Manage Hit From Asia-Pac Nat Cat

Sept 6 (Reuters) - (The following was released by the rating agency)

MELBOURNE (Standard & Poor’s) Sept. 6, 2011—In a report published today, Standard & Poor’s Ratings Services said it believes the impact of the series of natural disasters between September 2010 and June 2011 on reinsurers’ overall financial profiles can be managed (see “Asia-Pacific Reinsurers Start To Push Through Higher Prices In Wake Of Regional Catastrophes”).

Underwriting results for a number of global reinsurers with operations in Asia-Pacific were hit by the disasters, which included an earthquake and tsunami in Japan, two major earthquakes in New Zealand, and floods and a cyclone in Australia. However, outside Japan, regional domiciled rated reinsurers have limited or manageable exposure to the region’s catastrophe events as they write mostly domestic business. As a result, we have not taken rating action or changed the outlook on reinsurers incorporated in Asia-Pacific recently.

Insured claims from these Asia-Pacific events could amount to as much as US$51 billion, according to information from AIR Worldwide. Prospectively, we could see higher property catastrophe reinsurance premiums and tighter terms and conditions—especially in Japan, Australia, and New Zealand—as international reinsurers attempt to claw back some of the losses.

Reinsurance pricing in the rest of Asia (outside Japan) is uncertain, reflecting the counteracting effects of shrinking global reinsurance capacity and the competitive but rapid growth of primary insurance in the region. Nevertheless, soft reinsurance pricing is likely to continue in some parts of Asia markets, especially in those markets not prone to catastrophes, such as Singapore, Malaysia, and Thailand.

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