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Insurers challenged by slowing economies and volatile markets

Slowing economies could weigh on Asia Pacific insurers' growth, says S&P Global Ratings in a new report. However, rising risk awareness and low insurance penetration underpin demand for protection.

The report, titled “Asia-Pacific Insurance Midyear Outlook 2023 — Higher Rates And Reinsurance Test Ratings Boundaries”, adds that stable credit trends prevail across the sector. Of the Asia-Pacific insurers that S&P rates, 90% have a ’Stable’ outlook.

Other key takeaways from the midyear outlook are:

• High-for-longer interest rates (except in China) could further dent asset valuations and cause unrealised losses.

• Forex risks could mount for insurers with significant overseas investments (e.g., in Taiwan and Japan). High hedging costs to erode insurers’ earnings.

• IFRS 17 and new regulatory frameworks could see changes to strategies and key performance indicators. Insurers also face higher operational costs.

Key risks

The report outlines as well several insurance key risks:



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