Asia-Pacific reinsurers face margin pressure amid falling rates

Asia-Pacific (APAC) reinsurers are expected to face profitability challenges over the next two years due to falling premium rates and investment market volatility, according to S&P Global Ratings. While annual premium growth is projected to reach between 2% and 4% through 2027, strong competition and ample capacity are likely to keep prices under pressure.

Regional reinsurers currently earn lower returns on equity than their global peers, primarily due to thinner underwriting margins. This gap is expected to persist through 2027. Additionally, APAC reinsurers hold a higher percentage of investments in equities, property, and alternative assets compared to global counterparts, increasing exposure to financial market downturns.

In Hong Kong, Peak Reinsurance Co. Ltd. is pursuing global expansion through new underwriting platforms and a focus on life insurance and structured solutions. While the company maintains strong capital reserves, S&P estimates its property and casualty net combined ratio will increase to between 90% and 95% for the 2026 to 2028 period, driven by softening global reinsurance prices.