According to AM Best’s analysis, the rating agency’s Asia-Pacific composite (which includes 33 reinsurers domiciled in the region reporting under IFRS 17 accounting standards) recorded an improved combined ratio overall in 2024 of 91.4%, compared to 92.5% in 2023 and 95.8% in 2022.
The differential is driven by greater exposure to the domestic proportional treaty portfolio, which lacked benefit from the recent hard market, as well as a more property-focused book with shorter liability duration, resulting in less combined ratio reduction from the discounting effect under IFRS 17 in the combined ratio.
Nevertheless, profitability improvement is largely attributed to good results in overseas portfolios, explained AM Best.
The firm also reported that there is an increase in retrocession capacity and quotation markets in favour of Asian reinsurers. The regional reinsurers see a stronger willingness from retrocessionaires to ease terms and conditions tightened from the prior hard-market correction.
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However, the Asian composite recorded a 4.1% decline in net insurance service revenue, reflecting the lagging nature of earned revenue recognition.
AM Best explained that this is because some reinsurers rebalanced their portfolios in 2023, causing reduced gross premiums written through the re-underwriting of unprofitable business. The reduced premium is partially earned and reflected in 2024 insurance service revenue.
However, shareholders’ equity remains robust, growing by 3.8% in 2024, following a strong 20.9% increase in 2023, driven by hybrid debt issuance and retained earnings.
Despite stable capital levels in 2024, the ratings agency reports that reinsurers in the region are actively exploring alternative capital solutions to enhance capacity. In January 2025, Taiping Re issued a three-year catastrophe bond, Silk Re, sized at $35 million, making it Asia’s first dual-peril, dual-trigger cat bond, covering US-named storms and Mainland China earthquakes.
The second was Peak Re, placing its cat bond, Black Kite Re 2025-1, in April 2025, a $50 million placement. This deal expanded the firm’s risk transfer capabilities across both developed and emerging Asian markets. This issuance included Japan earthquake and typhoon perils, and earthquakes in China and India.
Finally, the composite’s weighted average return on equity extends the improving trend from 2023, growing to 11.3% for 2024, supported by stronger underwriting results and higher investment income. A majority of the reinsurers in the composite recorded higher net income, with Chinese reinsurers achieving the most significant gains, according to AM Best.
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