S&P Report Says Singapore’s Life and Nonlife Insurance Industries Stay Resilient; Outlook Stable

Standard & Poor’s Ratings Services has issued a new report on Singapore’s insurance industry, which concludes that it is expected to record a satisfactory operating performance, and that the outlook for both the life and P/C (nonlife) sectors are stable.

“Despite weathering a difficult climate in recent years that is characterized by tough economic and investment conditions, regional catastrophic events and the Severe Acute Respiratory Syndrome (SARS), both the life and nonlife industries have remained resilient,” stated S&P credit analyst Adrian Chee of the Financial Services Ratings Group.

“This will be assisted by the improving domestic economy, and the continued underwriting discipline expected in the nonlife sector, he added. The reported noted that the financial strength of life insurers in Singapore remains “underpinned by their robust capitalization and sound balance sheet structures. With the implementation of the risk-based capital (RBC) framework, this is expected to result in greater emphasis on the insurers’ capital and asset-liability management.”

Commenting on Singapore’s P/C market, S&P credit analyst Nancy Koh of the Financial Services Ratings Group, indicated: “The Singapore property-casualty insurance market will also continue to demonstrate solid capitalization and prudent reserving practices, although players are likely to be challenged in managing underwriting performance amid a softening environment and competitive industry.

“Continued strengthening of their underwriting practices, coupled with proactive loss mitigation steps, particularly in the motor sub-sector, will underpin the financial strengths of the stronger players and differentiate them from the rest of the pack,”

She noted, however, that the “implementation of the RBC framework will also see the nonlife industry increasingly focused on capital and asset-liability management.”

The report, entitled “Singapore Insurance Outlook 2004-2005,” also provides rating summaries of life and nonlife insurance companies rated by Standard & Poor’s. The research is available on RatingsDirect, Standard & Poor’s Web-based credit analysis system, at www.ratingsdirect.com. The report can also be found on Standard & Poor’s Web site at www.standardandpoors.com. Select ” Asia/English” for region/language. Under Credit Ratings in the left navigation bar, click on “News & Analysis” and find the report under “Credit Reports.”