According to industry experts, European insurance companies should look towards expanding into the Asia Pacific market. With their current position in Asia (ex.Japan) their credit rating remains neutral while a stronger position in the future has the ability to affect credit implications positively.
A report issued by international ratings agency Moody’s Investors Service saw that, while European insurers have a relatively strong position at home, they have been slow to expand into the emerging Asian (ex.Japan) market. Their share of the life insurance market in the Asia Pacific region is just below 10% of the total regional Annual Premium Equivalent (APE).
Revenue generated from insurers’ Asia sales is also quite modest at around 5%. The exception is insurance giant Prudential Plc. which has a strong presence in Asia. They are considering moving their head office from London to Hong Kong, reflecting the importance of Asia to their business.
Moody’s predicts that more European insurers will look to Asia to improve their credit profiles and balance the market stagnation being foreseen in Europe. A expansion into Asia will see diversity in company portfolios and profitability benefits, making it an attraction future option.
According to Moody’s, success in Asia will depend on a company’s ability to adapt to evolving regulations, manage product and service innovation and control their distribution networks. This fast-growing market is undoubtedly large, and companies will find great variation between business practice and ease of access to countries across the region.
Moody’s analysis shows that Vietnam, the Philippines, Indonesia and Thailand currently offer the highest potential for investors. Failure to move and secure a better position now may prove to be a lost opportunity in the future.