Fitch Ratings projects that despite ongoing market volatility, the Asia-Pacific (APAC) insurance sector will remain resilient in 2025, supported by solid earnings and strong capital buffers.
However, the outlook for life insurers in Mainland China and Taiwan has been downgraded to “negative.” Mainland China faces pressure from slowing economic growth, profit fluctuations, and structural shifts in products and distribution channels. Additional challenges include increased equity exposure, slowing premium growth, and risks from negative interest rate spreads in a low-rate environment.
Taiwan’s downgrade stems from the sharp appreciation of the New Taiwan Dollar, which has heightened currency mismatch risks for insurers whose liabilities are largely backed by U.S. dollar assets. Insurers are responding by expanding hedging activities and shifting toward more U.S. dollar-denominated policies.
Across the region, life insurers are focusing on conservative investment strategies prioritizing quality growth, while non-life insurers emphasize operational efficiency and cost control. Underwriting, capital management, and asset-liability strategies are being adjusted in line with market conditions.
Despite short-term profit pressures, Fitch believes most insurers can absorb shocks thanks to robust capital cushions. Japanese life insurers remain stable, supported by accounting rules that limit bond yield volatility.
APAC insurers are also raising capital to meet new solvency regulations. While non-life insurers are expected to benefit from premium increases, they face risks from natural disasters and rising reinsurance costs. As companies manage claims inflation and broader market challenges, attention on high-margin products and pricing adjustments is expected to persist.
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