KUALA LUMPUR: Standard & Poor’s Ratings Services sees more upside for Asia Pacific non-life insurers in 2010 and expects high double-digit growth in the developing markets of China and India in 2010, low double-digit growth for the more developed markets, and stagnant growth for Japan and Taiwan.

It said on Wednesday, March 10 that with non-life claims usually rising during tough economic times, the “recovery” period of 2009 saw all non-life insurers across Asia Pacific survive into a new year, with no failures recorded across the sector.

"That said, the disparity of the non-life markets across the region is obvious, with strong growth in some and treading of water in others," according to a new report published by S&P ratings services, titled “Post-Financial Crisis, What’s Next For Asia Pacific Non-Life Insurance?”

Standard & Poor’s expects to see high double-digit growth in the developing markets of China and India in 2010, low double-digit growth for the more developed markets, and stagnant growth for Japan and Taiwan.

Markets in which there were underwriting losses — like Australia — have shown premium price increases, as has China, where premium rates are rising on top of already strong growth.

“We expect to see a rebound in reported 2009 earnings, with improved investment markets, a bounce-back in equity prices, and a narrowing of credit spreads,” said credit analyst Paul Clarkson, of Standard & Poor’s Financial Services Ratings group.

“With premium prices holding up or hardening for most of 2009, underwriting performances should hold or improve—which would benefit earnings and internal capital generation in 2010. If interest rates remain low, interest earnings on fixed interest could be dampened, although some countries have seen increasing interest rates on the back of rising inflationary pressures.”

Australia, New Zealand, Hong Kong, and Singapore saw earnings rebound in 2009, and S&P expects this to continue into 2010. Australia and New Zealand’s earnings improvement could be balanced by some new entrants, and ample capacity.

Hong Kong and Singapore’s earnings should survive pressure on statutory classes, and continue their improvement.

It expects that Japan, South Korea, and Taiwan will have mixed results: mature markets and low economic growth in Japan are likely to stall any growth in non-life premiums, while in Taiwan a slow autos market will slow premium growth for the next one-to-two years, with auto insurance accounting for 50% of non-life premiums.

South Korea’s premium growth was more than 10% in 2009, driven by growth in long-term lines, mainly in third-sector insurance, and it expects this growth to be maintained in 2010 on the back of stabilized expense and loss ratios in the auto-line market and insurers’ sound investment portfolios.

China and India saw strong growth in 2009 despite underwriting weakness; both markets should be stable in 2010, with capital adequacy generally being assessed as good, especially for the larger or state-owned companies.