HONG KONG--(BUSINESS WIRE)--The operating environment for insurers in the Asia/Pacific region improved in the most recent fiscal period with the significant recovery in asset prices. Insurers benefited from higher investment income and realized and unrealized capital gains that led to improvements in capitalization. However, financial results may not be as strong as in 2009, as asset prices rebounded from such a low point in 2008. In addition, the region's stock markets have been volatile, and insurers are investing new cash flows at extremely low interest rates.

• Premium growth in most life and non-life markets remained strong, though Japan's non-life market and Australia's life market each experienced contractions in premiums.
• Prudent insurers have adjusted to low interest rates. Life companies have tweaked product designs, while non-life insurers have raised premium rates and improved underwriting standards.
• Leading insurers in the region continue to adjust to competitive forces prompted by the emergence of direct sales and distribution through bancassurance.
• On the regulatory front, the pace of growth in China's life and non-life markets has led regulators to focus on improvements in market discipline, while Japanese insurers face a revised regulation for calculating solvency.
• Asia's larger players, with limited opportunities for growth in their home markets, continue to look abroad to expand their business.

• Meanwhile, U.S.-based Prudential Financial Inc. and MetLife Inc. purchased former units of American International Group, Inc. to bolster their presence in the Japanese life market.
• Initial public offerings in the past 12 months have set the stage for more companies to seek financial flexibility to remain competitive domestically while expanding overseas.

To access a copy of this A.M. Best Co. special report, please visit http://www3.ambest.com/bestweek/bestweekreports.asp?rt=ir.

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