Source: insurancebusinessmag.com

AM Best has raised the financial strength rating of Asian Reinsurance Corporation (Asian Re) from B+ (Good) to B++ (Good), and the long-term issuer credit rating from “bbb-” (Good) to “bbb” (Good). The outlook on both ratings has been revised to stable from positive.

The rating agency cited Asian Re’s balance sheet strength, which it assessed as strong, alongside adequate operating performance, a limited business profile, and an appropriate enterprise risk management (ERM) framework.

AM Best attributed the upgrade to continued improvement in Asian Re’s operating performance. Positive operating results were recorded in four of the past five years. Performance in 2020 was affected by reserve strengthening measures and higher-than-expected claims. The company reported a return-on-equity ratio of 9.4% in 2024, up from 4.6% in 2023.

The company’s combined ratio improved to 85.3% in 2024 from 101.6% the previous year, following remediation efforts. Investment income, primarily from interest-bearing assets, has consistently contributed to earnings. AM Best expects future performance to be supported by underwriting profitability and steady investment returns.

Asian Re has continued to focus its underwriting activity on treaty and facultative reinsurance across Asia, the Middle East, and Africa. As part of its long-term strategy, the company has sought to improve geographic and line-of-business diversification while managing challenges in individual markets.

As of Dec. 31, 2023, Asian Re reported shareholders’ funds totaling US$72.71 million and total assets of US$121.98 million. Technical reserves were valued at US$44.78 million, and the company recorded a gross premium volume of $25.88 million.

The company reported an absolute capital base of US$76 million at year-end 2024, which AM Best views as modest compared to regional peers. This level of capitalization increases the company’s sensitivity to potential shock events. In 2011, Asian Re experienced a significant contraction in operations following large catastrophe losses. The impact prompted the company to undergo recapitalization and restructure its operations. Since then, Asian Re has introduced strategic initiatives aimed at restoring underwriting strength and expanding its market presence.

Market dynamics in Asia-Pacific are also affecting reinsurance strategy. According to Fitch Ratings, pricing conditions have stabilized across the region following hard market trends observed in 2023. Sufficient capacity has contributed to flattening rate increases, impacting reinsurers’ ability to push for pricing adjustments. For Asian Re, this trend may shape underwriting decisions and influence the competitiveness of its offerings in the short term.