Long-Term Issuer Credit Rating (Long-Term ICR) upgrades exceeded downgrades for AM Best-rated Asia-Pacific (re)insurers in 2023, driving predominantly by improved balance sheet strength and favorable operating performance, according to a new AM Best report.

The Best’s Special Report, “Asia-Pacfic Benchmarking: Positive Signs While Navigating Climate and Geopolitical Uncertainty,” states that eight Long-Term ICRs were upgraded in 2023 with four downgraded on a range of factors, including falling Best’s Capital Adequacy Ratio (BCAR) scores and weakening operating results. Additionally, AM Best assigned 10 new ratings in the region during the year.

AM Best’s geographical rating coverage across Asia and Oceania is broad, and more than 75% of AM Best’s ICRs for Asia-Pacific rating units carried a Long-Term ICR of “a-” or higher, with mature markets skewing more favorably than emerging markets. The report highlights dynamics at work in mature and emerging markets.

“Mature markets generally have more stable economic conditions and insurers may face fewer underwriting risks due to better-established risk management practices, more-accurate actuarial modeling and a deeper understanding of market dynamics,” said David Lopes, senior industry research analyst, AM Best. “At the same time, emerging markets typically have simpler insurance products, resulting in lower probability of adverse claims development, and low insurance penetration.”

The report compares various rating drivers and building-block assessments in aggregate on rated carriers in mature and emerging markets. Despite elevated catastrophe activity in recent years, most outlooks on Asia-Pacific rating units were stable at year-end 2023, at 87%, though a larger proportion of those stable outlooks were for companies operating in mature markets than emerging-market participants. Of the outlook revisions that did occur in 2023, most were moved to positive from stable and on companies operating in mature markets; in particular, New Zealand and Singapore.

The types of companies rated, operating in mature and emerging markets, are diverse and include reinsurers, insurers, mutuals, captives, credit and health insurers, takaful operators and protection and indemnity (P&I) clubs.

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=347004.

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