According to a new report from AM Best, Asia’s reinsurers are actively expanding to mature overseas markets as part of a move to diversify and be more agile with underwriting cycle management, which is seen as credit positive.
With economic momentum slowing in China, and mature markets like Japan and South Korea facing demographic and economic headwinds, the rating agency noted in a recent report that North Asian major reinsurers have increasingly turned to international markets to sustain growth and diversify risk.
Christie Lee, senior director at AM Best, said major European reinsurers have identified the Asia-Pacific region as a key growth source over the past decade, and Asia-Pacific reinsurers are now following a similar strategy by significantly expanding abroad.
Lee continued, “With economic momentum slowing in China, and mature markets like Japan and South Korea facing demographic and economic headwinds, North Asian major reinsurers have increasingly turned to international markets to sustain growth and diversify risk.”
AM Best’s report also observed that Asian reinsurers have significantly expanded their P&C portfolios beyond their home markets.
“The average overseas premium contribution among major North Asian reinsurers rose from 22% in 2010 to 42% in 2024. Initial expansion focused on neighbouring Asia-Pacific markets, followed by entry into mature markets, particularly the United States and Europe,” the rating agency explained.
The US is reportedly the preferred destination for reinsurers due to its market depth and diversification potential, especially for the casualty lines.
At the same time, AM Best stated that global expansion offers more than just growth for reinsurers, as it also supports capital efficiency from risk diversification, increases investment returns by extending liability duration, and, most importantly, builds capabilities for long-term growth.
The rating agency concluded, “Taking additional catastrophe risks is not really within their risk appetite. Overseas expansion, particularly into US casualty lines, helps balance portfolios and extend liability durations. This enables higher returns from matching long-term fixed income investments in the current elevated interest rate environment.
“While social inflation remains a structural concern in the US casualty market, Asian reinsurers have adopted a cautious and selective approach in casualty segments less impacted by inflation, benefitting from the absence of a legacy book of business.”
