KUALA LUMPUR: Major Asia-Pacific (APAC) reinsurance companies saw their composite's return on equity surge to 9.2 per cent from 0.1 per cent under International Financial Reporting Standards (IFRS) 17, supported by a more stable investment environment and benign catastrophe activity.

This is according to Best's Market Segment Report, "Asia-Pacific Reinsurers Achieve Strong Results in Improved Investment Environment", a part of AM Best's look at the global reinsurance industry ahead of the Rendez-Vous de Septembre in Monte Carlo.

Other reinsurance-related reports, including AM Best's ranking of top global reinsurance groups and in-depth looks at the insurance-linked securities, Lloyd's, life/annuity, health and regional reinsurance markets, are available at Best's Research.

AM Best senior director, head of analytics, Christie Lee said Asian reinsurers' underwriting strategies for 2024 are diverse and depend on their ability to secure retrocession capacity, as well as their ability to manage the underwriting cycle.

"The large Asian reinsurers have adjusted their catastrophe capacity offerings in their home markets to shrink their catastrophe exposure accumulation, while others have deployed a mature market growth strategy to capture the benefits of material rate increases," she said in a statement.

According to this report, Asian reinsurers, with business profiles characterised by a more traditional property line focus, as well as a relatively large book of proportional treaties, have benefitted less directly from global reinsurance rate hardening.

Nevertheless, the stability of operating performance of Asia's reinsurers over the years has been notable, and they are working to improve profitability by expanding business overseas, with China still facing distinct challenges, though, as the country's post-COVID recovery remains weak.

The report unveiled that the capital position of the major reinsurers in the APAC composite remains robust. Diversification will remain the business philosophy and strategy for Asia's large reinsurers.

In addition to geographic expansion, diversifying their lines of business from traditional property treaties to building liability, life/health and specialty books of business will allow reinsurers to better manage the reinsurance cycle.