Catastrophe accumulation, pricing discipline top AM Best’s Asia watchlist for 1/1
Ahead of its SIRC briefing, the rating agency says softer renewals underpin stable outlooks, but underwriting discipline, geopolitical repricing and balance-sheet resilience will shape credit views into the next cycle.
Natural catastrophe accumulation, geopolitical and macroeconomic conditions, pricing discipline and risk-adjusted capital are the factors AM Best will track into the next renewal cycle.
Stable non-life outlooks for Malaysia, Indonesia, Vietnam, the Philippines and India rest on economic growth and rising penetration as well as softer reinsurance pricing.
Marine war, energy and political violence capacity has repriced to multiples of pre-conflict levels. P&I club withdrawals are a particular concern for Singapore as a marine hub.
MAS’s capital-instrument changes and extended ILS grant scheme should support structural demand for alternative risk transfer, AM Best says, while Bermuda’s role in Asian life and annuity reinsurance is growing.
Softer reinsurance pricing is one of several factors underpinning stable outlooks for non-life insurance markets in Malaysia, Indonesia, Vietnam, the Philippines and India, alongside solid economic growth and rising penetration. But AM Best says credit quality into the next renewal cycle will hinge on how insurers manage underwriting discipline, claims inflation and catastrophe accumulation.
“Maintaining underwriting discipline, managing claims and medical inflation, as well as managing CAT exposure accumulation, remain some of the key areas of focus to support profitability over the intermediate term,” said Victoria Ohorodnyk, senior director and head of analytics at AM Best, speaking ahead of the agency’s Insurance Market Briefing at the Singapore International Reinsurance Conference (SIRC) on Tuesday.
“The defining change over the past year has been the continued shift to a buyers’ market,” Ohorodnyk said. “Abundant capacity, sliding rates and overplacement during the 2026 renewal season have been the key themes. Additionally, where programmes have stayed the same, companies have noted that terms and conditions broadened.”
Global reinsurance capital reached a record US$800bn at the end of June, according to Aon. APAC property-catastrophe rates fell 15%–20% by mid-year, Fitch said. Catastrophe activity remained elevated across the region, with earthquakes, floods and cyclones, although APAC avoided a peak insured-loss event through September, according to Gallagher Re.
“Maintaining underwriting discipline, managing claims and medical inflation, as well as managing CAT exposure accumulation, remain some of the key areas of focus to support profitability over the intermediate term.”
Victoria Ohorodnyk
Senior director and head of analytics at AM Best
Speciality lines buck the trend
Not every line softened. According to Ohorodnyk, marine war, energy and political violence capacity has repriced to several multiples of levels seen before the Middle East conflict, while reinsurer withdrawals led several P&I clubs to cancel regional war-risk cover, further squeezing marine and energy capacity.
“This was particularly meaningful for Singapore given its role as a marine hub,” she said.
Singapore’s marine and cargo lines account for about 10% of premiums written, compared with 1–5% in most other APAC markets, according to S&P Global.
Political violence and terrorism cover also saw material rate increases given the geopolitical situation, she added.
“This was particularly meaningful for Singapore given its role as a marine hub.”
Victoria Ohorodnyk
Senior director and head of analytics at AM Best
What AM Best is watching
Looking to the next renewal cycle, Ohorodnyk said AM Best will watch four factors that could shift its view of (re)insurers’ credit quality: how well they manage natural catastrophe exposure; geopolitical and macroeconomic conditions; whether they hold underwriting discipline as pricing softens; and balance-sheet resilience, including risk-adjusted capital levels.
“(Re)insurers’ ability to maintain underwriting discipline in a competitive pricing environment” would be central to long-term operating profitability, she said.
Alternative structures gain regulatory tailwind
Capital management is also driving interest in alternative risk transfer (ART) as a complement to conventional reinsurance. Ohorodnyk cited “capital efficiency under risk-based capital regimes, regulatory support and the demand due to the region’s protection gap” as drivers.
Singapore has moved fast on the regulatory side. From January 2026, eligible capital instruments issued by locally incorporated insurers can qualify as additional Tier 1 or Tier 2 capital under the risk-based capital framework, provided they are sold only to non-retail investors. Ohorodnyk said the change “should support structural demand for risk transfer”.
The Monetary Authority of Singapore (MAS) has also renewed its insurance-linked securities (ILS) grant scheme from January 2026 through December 2028, reversing earlier restrictions by extending upfront funding to catastrophe bonds covering risks outside APAC, as well as other ILS arrangements such as collateralised reinsurance and sidecars. Eligible risks include natural catastrophe, longevity, mortality, operational and cyber.
Parametric and pooled solutions are also growing in Southeast Asia, Ohorodnyk said, citing the Philippines. In October, the Department of Finance said the Philippines and SEADRIF were finalising a disaster-risk financing programme that includes parametric insurance, with a formal policy expected to be signed in the coming months.
Bermuda’s life role expands
Bermuda-based carriers remain an important part of the global panel for Asian property catastrophe programmes, Ohorodnyk said. “On the life side, Bermuda’s role has been growing in recent periods, with life and annuity reinsurance transactions increasing,” she said.
One of the most recent examples is Sompo Life Re, which began operations in Bermuda in August with an intra-group cession of part of Sompo Himawari Life’s in-force medical block, a move aimed at improving capital efficiency in Japan.
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Catastrophe accumulation, pricing discipline top AM Best’s Asia watchlist for 1/1
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(Re)in Summary
Softer reinsurance pricing is one of several factors underpinning stable outlooks for non-life insurance markets in Malaysia, Indonesia, Vietnam, the Philippines and India, alongside solid economic growth and rising penetration. But AM Best says credit quality into the next renewal cycle will hinge on how insurers manage underwriting discipline, claims inflation and catastrophe accumulation.
“Maintaining underwriting discipline, managing claims and medical inflation, as well as managing CAT exposure accumulation, remain some of the key areas of focus to support profitability over the intermediate term,” said Victoria Ohorodnyk, senior director and head of analytics at AM Best, speaking ahead of the agency’s Insurance Market Briefing at the Singapore International Reinsurance Conference (SIRC) on Tuesday.
“The defining change over the past year has been the continued shift to a buyers’ market,” Ohorodnyk said. “Abundant capacity, sliding rates and overplacement during the 2026 renewal season have been the key themes. Additionally, where programmes have stayed the same, companies have noted that terms and conditions broadened.”
Global reinsurance capital reached a record US$800bn at the end of June, according to Aon. APAC property-catastrophe rates fell 15%–20% by mid-year, Fitch said. Catastrophe activity remained elevated across the region, with earthquakes, floods and cyclones, although APAC avoided a peak insured-loss event through September, according to Gallagher Re.
“Maintaining underwriting discipline, managing claims and medical inflation, as well as managing CAT exposure accumulation, remain some of the key areas of focus to support profitability over the intermediate term.”
Victoria Ohorodnyk
Senior director and head of analytics at AM Best
Speciality lines buck the trend
Not every line softened. According to Ohorodnyk, marine war, energy and political violence capacity has repriced to several multiples of levels seen before the Middle East conflict, while reinsurer withdrawals led several P&I clubs to cancel regional war-risk cover, further squeezing marine and energy capacity.
“This was particularly meaningful for Singapore given its role as a marine hub,” she said.
Singapore’s marine and cargo lines account for about 10% of premiums written, compared with 1–5% in most other APAC markets, according to S&P Global.
Political violence and terrorism cover also saw material rate increases given the geopolitical situation, she added.
“This was particularly meaningful for Singapore given its role as a marine hub.”
Victoria Ohorodnyk
Senior director and head of analytics at AM Best
What AM Best is watching
Looking to the next renewal cycle, Ohorodnyk said AM Best will watch four factors that could shift its view of (re)insurers’ credit quality: how well they manage natural catastrophe exposure; geopolitical and macroeconomic conditions; whether they hold underwriting discipline as pricing softens; and balance-sheet resilience, including risk-adjusted capital levels.
“(Re)insurers’ ability to maintain underwriting discipline in a competitive pricing environment” would be central to long-term operating profitability, she said.
Alternative structures gain regulatory tailwind
Capital management is also driving interest in alternative risk transfer (ART) as a complement to conventional reinsurance. Ohorodnyk cited “capital efficiency under risk-based capital regimes, regulatory support and the demand due to the region’s protection gap” as drivers.
Singapore has moved fast on the regulatory side. From January 2026, eligible capital instruments issued by locally incorporated insurers can qualify as additional Tier 1 or Tier 2 capital under the risk-based capital framework, provided they are sold only to non-retail investors. Ohorodnyk said the change “should support structural demand for risk transfer”.
The Monetary Authority of Singapore (MAS) has also renewed its insurance-linked securities (ILS) grant scheme from January 2026 through December 2028, reversing earlier restrictions by extending upfront funding to catastrophe bonds covering risks outside APAC, as well as other ILS arrangements such as collateralised reinsurance and sidecars. Eligible risks include natural catastrophe, longevity, mortality, operational and cyber.
Parametric and pooled solutions are also growing in Southeast Asia, Ohorodnyk said, citing the Philippines. In October, the Department of Finance said the Philippines and SEADRIF were finalising a disaster-risk financing programme that includes parametric insurance, with a formal policy expected to be signed in the coming months.
Bermuda’s life role expands
Bermuda-based carriers remain an important part of the global panel for Asian property catastrophe programmes, Ohorodnyk said. “On the life side, Bermuda’s role has been growing in recent periods, with life and annuity reinsurance transactions increasing,” she said.
One of the most recent examples is Sompo Life Re, which began operations in Bermuda in August with an intra-group cession of part of Sompo Himawari Life’s in-force medical block, a move aimed at improving capital efficiency in Japan.
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