OLDWICK, N.J. - (Business Wire) Asia’s insurance companies are expected to avoid major liquidity problems stemming from the global financial crisis, but investment income will decrease as interest rates fall in the medium term, and companies will focus on underwriting profit. Many insurers still have positive cash flow, and for the most part, the durations of assets are shorter than the liabilities. Controlling expenses will become very important, and this also may lead to some consolidation.
- A.M. Best Co. expects companies to improve their risk management practices, pursue a stable level of solvency and further strengthen their capitalization.
- Companies with stronger ratings, superior brand power and greater financial strength will benefit and gain more market share in coming years.
- Asian life insurers have seen consumers turn cautious on the investment-linked products that helped fuel regional companies’ growth in recent years, but low penetration in developing markets still affords significant opportunities.
- In China, life insurance premiums jumped by 24.2% in 2007 as buoyant local stock markets boosted sales of unit-linked insurance, but the sharp selloff in 2008 made such products less attractive to customers.
- Through most of 2008, many non-life insurance markets in the Asia-Pacific region remained vibrant, albeit highly competitive in lines such as motor, fire and marine.
- Cross-border investments—within, into and out of the region—continued at a brisk pace as non-life insurers sought to extend their reach and tap new markets.
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Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.
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