Global reinsurers enticed by Asia growth
Global reinsurers are increasingly targeting growth in the Asia-Pacific region, attracted by the strong growth in the region and a growing sophistication among cedants in their use of reinsurance.
That is one of the conclusions of a new report by rating agency Fitch called: Asian Reinsurance Markets - Softening Premium Rates With Greater Foreign Interest.
“The strong growth momentum of the Asian reinsurance markets is one of the attractions for foreign participants, along with increasing risk awareness and the continued market demand by the cedants, spurred by frequent occurrences of natural catastrophes in the region,” said Fitch in the report.
But Fitch also said premium rates for regional reinsurance policies renewed during 2014 have reached a plateau. The softening premium rates are largely attributable to a decrease in the frequency and severity of natural catastrophes in the region since 2011.
An increase in reinsurance capacity in the form of new start-ups, as well as Asian operations set up by global reinsurers, are another factor that has contributed to the weaker premium rates.
“Several companies have taken advantage of the current situation to expand their reinsurance coverage at a lower cost,” Fitch added.
The report also notes that the potential financial impact caused by natural catastrophes has led to a review of risk appetite and management strategy for both the insurers and reinsurers.
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