APAC Reinsurers Find Growth Abroad as Home Markets Soften

Asia-Pacific reinsurers reversed a 2024 revenue decline last year, posting a 4% increase in net insurance service revenue, driven mainly by overseas business, according to a new composite report from AM Best.

The uptick comes as Asia's insurance markets grow more competitive and market conditions soften, the ratings agency said. The shift reflects significant structural changes underway in the region.

On underwriting, the composite's combined ratio edged up less than one percentage point to 92% in 2025. AM Best credited improved rate adequacy and a relatively quiet catastrophe year across Asia.

Overseas business remains attractive for APAC reinsurers, the report noted, because it carries a higher share of non-proportional treaties. That structure lets them benefit more from the favorable pricing environment that has held since the hard-market turn.

AM Best expects the 2026 renewal period in Asia to favor buyers. Abundant capacity and falling rates should let cedents boost protection and support growth while keeping retention levels broadly stable, the report said. The outlook for 2027 is continued rate easing on treaties not hit by losses.

Southeast Asia and India, in particular, show ample reinsurance capacity, reflecting strong appetite and confidence in the region's growth prospects. Earnings remain supportive despite elevated catastrophe claims.

“As reinsurance market conditions become more competitive, cedents are adopting a more strategic approach to reinsurance purchasing, making selective refinements to their programmes and retention strategies to target greater capital efficiency and earnings stability,” the report said.

The report flagged the planned 2027 merger of Mitsui Sumitomo Insurance (MSI) and Aioi Nissay Dowa Insurance (ADI) in Japan as a potential shift. The combined entity may need less reinsurance capacity than the two programs separately.

Christie Lee, Senior Director at AM Best, said the broader improvement in underwriting profitability since the hard-market turn is generally in line with global reinsurance trends. The magnitude of improvement has been more moderate for the Asian composite, she added, because of its higher share of proportional treaty business.

“Nevertheless, earnings continue to be driven largely by strong performance from overseas portfolios,” Lee said. “The MSI-ADI consolidation will likely intensify competition among reinsurers, brokers and service providers looking to defend their positions.”