Steady as she goes for credit profiles
Asian insurers’ credit profiles are stable, despite the persistence of a low interest rate environment, in view of enhanced profitability and still strong premium sales, Moody’s Investors Service has said.
“Furthermore, even though economic growth is moderating, the impact on premium sales has only been mild, while regulatory risk—which is at a high level in the region generally—has had a neutral to slightly positive effect from a credit perspective,” said Sally Yim, a Moody’s vice president and senior credit officer.
The Moody’s analysis was contained in a presentation titled Asian insurance companies: credit trends and a changing industry landscape.
In the area of products, Moody’s notes that while various measures, such as the reduction in the guarantees offered on new business, are credit-positive for insurers in Asia, new sales are still not material when compared with outstanding liabilities. Accordingly, the industry will require several years before it can offset its legacy-business risks.
Moody’s further considers that the sector’s trend of investments in riskier asset types, including equities, real estate and infrastructure project loans, will continue amid low interest rates.
With the regulatory environment in Asia, Moody’s sees a greater focus on customer protection, a development which will make it more costly for insurers, in terms of both their underwriting and their claims functions.
