It is not just the United States that is prone to
insurance company failures; the Asia-Pacific sector is
likely to follow suit.
to Standard and Poors (S&P) Rating Services,
the year 2003 will witness insurance companies failing
and duly withdrawing from the market in the Asia-Pacific
rating agency says India and China offer good, though
limited, prospects for insurers willing to take a long-term
approach. However, the majority of participants
growth fundamentals in the Asia-Pacific region over the
near and medium term will remain challenging.
sector is challenging, unsettled, and rife with competition.
There are no safe havens anywhere in the region,
says Ian Thompson, credit analyst and head of S&P
Asia-Pacific Ratings Group. Even Australia, the
most sophisticated market in the region, has seen significant
failures, recently suffering near collapse as a reinsurance
equity markets, lacklustre property markets, and credit
issues in some local capital markets such as Japan,
which continues to suffer from a prolonged erosion of
its banks operating performance have added
to the regions woes.
market participants battle against negative underwriting
conditions and volatile investment markets, it is clear
that the divide between companies with strong financials
and with weak financials is growing.
in the region are not entirely negative, however. Premium
growth is generally good, at levels above that of the
gross domestic product (GDP). At the same time, bancassurance
and direct selling have modernised distribution in the
Asia-Pacific market, he adds.