S&P gives negative to non-life insurance markets of Asia-Pacific

Standard & Poor has revised Japan and New Zealand's non-life insurance markets' outlook to negative from stable as it expects the recent earthquakes there to affect earnings and capital margins.

Standard & Poor's credit analyst Paul Clarkson. "We took the same action on India's market due to the likelihood of very poor underwriting performances. Conversely, we revised the outlooks on China and Malaysia's markets to positive from stable to reflect their strong growth momentum.

In emerging markets like China, robust gross domestc product (GDP) and insurers' low penetration rates may push sectoral growth into double digits. Developed markets, including Hong Kong and Singapore, will probably see a much slower growth due to stiff competition. Underwriting performances, however, will differ across markets and business lines. Pricing is likely to strengthen as reinsurance costs will increase after the recent catastrophes.

"We believe the region still has tremendous growth potential despite challenges. Risks to our outlooks include high inflation, withdrawal of reinsurance capacity, increased pricing and investment market volatility," said Clarkson.