Asia Insurance Review Some non-life insurers in Taiwan continued to see unfavourable claims development and reported net losses in the first quarter of 2023, but the majority had returned to operating profitability as of secondquarter 2023, notes AM Best. The Best’s Market Segment Report, “Market Segment Outlook: Taiwan NonLife Insurance”, adds that insurers also have adopted more conservative investment strategies and derisked their portfolios. The local stock market has recovered through the first nine months of 2023; however, non-life insurers continue to grapple with the low interest rate environment and volatility in operating results through capital gains and losses. Taiwan’s non-life segment suffered a huge net loss of NT$173bn ($5.4bn) in 2022 due to the COVID-19 pandemic, which outstripped the cumulative earnings of the last decade. Insurers needed to sell off investments to pay pandemic-related claims, and saw total investments shrink nearly 20% in 2022. AM Best is maintaining a negative outlook on Taiwan’s non-life insurance segment, citing increased reinsurance costs and a decline in the investment asset base, as some assets were liquidated to pay pandemic-related claims. Capitalisation “Weaker capitalisation will become the new normal following the Taiwanese non-life segment’s huge pandemic insurance losses,” said Madison Fan, a financial analyst at AM Best. “The industry’s average capitalisation has rebounded strongly thus far in 2023 but remains materially below pre-pandemic levels.” AM Best expects full-year 2023 operating performance to be bolstered by the recovery in the capital markets and reserve releases, given that COVID policies have all matured, and ultimate claims should be close to fully developed. One counterbalancing factor to the favourable operating performance is heightened reinsurance costs due to the current hardening cycle in the global reinsurance market. “The January 2023 renewal season was described as one of the toughest in the past decade, and the market expects that reinsurance rates will again increase in the 2024 renewals,” said Ms Stephanie Mi, a financial analyst at AM Best. 

Source- INSU NEWS 21-27 OCTOBER, 2023