Best’s Market Segment Report: AM Best Revises Outlook on Philippine Non-Life Insurance Segment to Stable

SINGAPORE–(BUSINESS WIRE)–#insurance–AM Best has revised its market segment outlook on the Philippine non-life insurance market to stable from negative, citing factors that include strong investment yields amid insurance market and economic growth.
In its Best’s Market Segment Report, “Market Segment Outlook: Philippines Non-Life Insurance,” AM Best states that the high domestic interest rate environment will keep insurers’ investment yields strong as companies reinvest their assets into higher yielding fixed-income instruments upon maturity. Opportunities in personal and commercial lines also are driving insurance market growth. While the main non-life business lines, in terms of premium share, remain fire and motor, the market experienced double-digit increases in the casualty, health and accident lines of business in 2023. Furthermore, primary rate increases in the property line are catching up to reinsurance rate hikes, although rate pressure remains due to heavy market competition.
“The market has struggled to keep pace with reinsurance rate increases for the property line given a general reluctance to lose market share, but this trend is now shifting,” said Susan Tan, financial analyst, AM Best. “Earlier anticipated hikes in minimum catastrophe tariffs to drive premium rate increases are no longer seen as a prerequisite to ensure adequate premium rates to achieve underwriting profitability.”
Additionally, the insurance market’s new accounting standard, the Philippine Financial Reporting Standard 17 (PFRS 17), takes effect on 1 January 2025. The implementation of PFRS 17, along with the Own Risk and Solvency Assessment (ORSA) framework adopted in 2023, is a positive development that will elevate risk management quality and financial resilience in the insurance market.
Moderating factors in the outlook revision to stable include the market’s net retention of underwriting risks, which could create earnings volatility, as well as the exposure to natural catastrophe risk, which is high in the Philippines.
To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=343139.
Tan will deliver a presentation on this market segment outlook at the Philippine Insurance Summit 2024. The event takes place 30 May 2024, at the New World Makati Hotel in Manila. To learn more about the Philippine Insurance Summit 2024, please visit the event overview.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
Copyright © 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED. Contacts
Susan TanFinancial Analyst+65 6303 5023susan.tan@ambest.com
Chris Lim, FCII, CFAAssociate Director, Analytics+65 6303 5018chris.lim@ambest.com
Christopher SharkeyAssociate Director, Public Relations+1 908 882 2310christopher.sharkey@ambest.com
Cynthia AngSenior Industry Research Analyst+65 6303 5026cynthia.ang@ambest.com