Fitch Ratings forecasts that the Asia-Pacific insurance sector will remain resilient in 2025. Strong earnings and ample capital buffers should help insurers withstand ongoing market swings.
China and Taiwan Life Sectors Face Headwinds
Despite the overall positive outlook, Fitch downgraded the life insurance outlook in both China and Taiwan to “Deteriorate.”
China: Slower economic growth and volatile earnings have weighed on life insurers. Structural shifts—such as new product designs and changing distribution channels—add further pressure. Increased equity holdings, weaker premium growth, and the risk of negative carry in a low-rate environment pose additional challenges.
Taiwan: A sharp rise in the New Taiwan dollar has exposed insurers to currency mismatches. Most liabilities are in local currency, while assets are often held in U.S. dollars. To manage this risk, firms are boosting hedging activities and offering more U.S. dollar-denominated policies.
Regional Insurers Adjust Strategies
Across the region, insurers are tweaking their approaches to match market conditions:
Life Insurers: Prioritize high-quality growth through conservative investments. In Japan, life insurers benefit from accounting rules that limit volatility from rising bond yields.
Non-Life Insurers: Focus on operational efficiency and cost control. Rising premiums should help support earnings, but firms remain cautious about natural catastrophe losses and higher reinsurance expenses.
Capital and Solvency Preparations Underway
Fitch notes that most Asia-Pacific insurers have strong enough capital buffers to absorb potential market shocks. Many are also raising fresh capital to meet incoming solvency requirements.
Ongoing Focus on Profitability
Insurers across APAC will continue to push high-margin products and adjust prices to manage claims inflation and broader economic challenges. This disciplined approach should underpin sector stability in the year ahead.
Related topics：
