S&P: Outlooks on Most Asia-Pacific Insurance Markets is Stable

July 5, 2007

The Hong Kong office of Standard & Poor’s Ratings Services has issued a report affirming the stable outlook on most of the insurance markets in the Asia-Pacific region. “They reflect strengthening balance sheets and strong growth prospects for most markets, which remain supportive of the industry’s credit profile,” said S&P.

“This is despite challenges such as continued softening in the non-life industry, increasing competition in some markets, and regulatory constrain for some life markets’ asset and liabilities management,” explained S&P credit analyst Connie Wong.

S&P noted that it has recently published insurance market overviews on Australia, China, Hong Kong, Korea, Malaysia, New Zealand, Philippines, Singapore, and Taiwan, as well as articles on Thailand and Japan.

“Standard & Poor’s has maintained a stable outlook on most markets, except for the recent revision to stable for the life and non-life insurance sectors of Philippines and the life insurance sector of New Zealand, and the ongoing positive outlook on both sectors in China,” Wong continued. “The outlook on Philippines’ life and non-life insurance industry was revised to stable from negative recently, reflecting improved underwriting performance in non-life sector and strong growth prospect in both sectors. The revision also reflects the positive impact from the proposed increased regulatory capital requirement for insurers.”

S&P also maintains a positive outlook on China’s insurance market, “reflecting,” S&P said, “improving operational fundamental and its proactive regulatory development.”

S&P also revised its outlook on New Zealand’s life insurance sector to stable from negative “through increased opportunities from a new government-sponsored voluntary superannuation regime ‘KiwiSaver’ and greater government focus on financial literacy, disclosure, and regulation.”

In conclusion, S&P said that “although Asia-Pacific’s insurance industry outlook is stable, the industry risks in the region vary from very high to low. This points to differences in consumer demands and complexity, degree of insurance penetration, levels of technical and management sophistication, and the influence of regulations.”

The insurance outlooks for the region were listed as follows:
Australia Stable/Stable
China Positive/Positive
Hong Kong Stable/Stable
Japan Stable/Stable
Korea Stable/Stable
Malaysia Stable/Stable
New Zealand Stable/Stable
Philippines Stable/Stable
Singapore Stable/Stable
Taiwan Stable/Stable
Thailand Stable/Stable

The market overviews can be found on RatingsDirect, the real-time Web-based source for Standard & Poor’s credit ratings, research, and risk analysis.

The report is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor’s credit ratings, research, and risk analysis, at: www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to: research_request@standardandpoors.com.

Ratings information can also be found on Standard & Poor’s public Web site at: www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search.

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