3rd August 2022
Operating conditions for property/casualty insurers in emerging markets are likely to be constrained by persistent inflationary pressures, tightening financing conditions, and slower economic growth in China and other markets, S&P Global Ratings said in a report published this week
"While the macro environment sees mounting headwinds, profitable earnings and robust capital buffers continue to support our ratings on P/C insurers in emerging markets," said S&P Global Ratings credit analyst Emir Mujkic, in the slides report "P/C Insurers In Emerging Markets: Risks Remain As The Economic Recovery Slows."
While higher inflation will likely support an increase in premium rates for P/C insurers as risks are being repriced, an increase in claim costs, particularly in motor and property lines, and potential reserving shortfalls for longer-tail lines will likely constrain underwriting results in the short term.
Higher interest rates will gradually support investment results. However, we expect more volatile capital markets will lead to some revaluation losses.
At the same time, new regulatory developments will continue to enhance risk awareness and policyholder protection, but the implementation of more sophisticated requirements comes at a cost."
New regulations with higher capital requirements may prompt capital raising. For some, reevaluation of business models could lead to consolidation.
S&P Global Trends(556 articles)
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