Credit ratings agency AM Best’s new composite report on Asia-Pacific (APAC) reinsurance companies has disclosed that the region reversed 2024’s revenue decline, posting a 4% increase in net insurance service revenue in 2025, driven primarily by overseas business.
This increase comes on the heels of Asia’s insurance markets becoming more competitive with softer market conditions, attributed to significant structural transformation, according to the AM Best report.
On the underwriting side, the composite’s combined ratio increased slightly, by less than one percentage point to 92% in 2025, supported by improved rate adequacy and relatively benign catastrophe activity across Asia.
For APAC reinsurers, overseas business remains attractive, as it has a greater concentration of non-proportional treaties, thereby allowing reinsurers to benefit more from the favourable pricing environment that has persisted since the onset of the hard market.
AM Best predicts that Asia’s renewal period in 2026 is buyer-friendly, with abundant capacity and falling rates enabling cedents to enhance protection and support growth, while retention levels largely remain stable. The expectation for 2027 is continued rate easing on non-loss-impacted treaties, explained the report.
Additionally, Southeast Asia and India show abundant reinsurance capacity, reflecting robust appetite and confidence in the region’s growth prospects, while earnings remain supportive despite elevated catastrophe claims.
The report added, “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 also emphasises that the planned 2027 merger of Mitsui Sumitomo Insurance Co., Ltd. (MSI) and Aioi Nissay Dowa Insurance Co., Ltd. (ADI) in Japan is a potential game-changer as the combined entity may require less reinsurance capacity than the two programs separately.
Christie Lee, Senior Director, AM Best, commented, “The broader improvement in underwriting profitability since the hard-market inflection point is generally consistent with global reinsurance trends, although the magnitude of improvement has been more moderate given the Asian composite’s higher share of proportional treaty business.
“Nevertheless, earnings continue to be driven largely by strong performance from overseas portfolios. The MSI-ADI consolidation will likely intensify competition among reinsurers, brokers and service providers looking to defend their positions.”
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