Asia's life insurance markets busted by bad economic and investment status

Growth momentum, weakening capitalization and hampering earning prospects dragged life insurance industry down.

In a release from Standard & Poor's, key life insurance markets in Asia Pacific are facing challenges associated with weakening or slowing economic conditions and volatility in investment markets. Standard & Poor’s Ratings Services sees these economic and investment market factors adversely affecting growth momentum, weakening capitalization and hampering earning prospects to varying degrees in the region.

Here's more from Standard & Poor's:

Our expectation is such that our stable credit outlook for the Asia-Pacific life insurance sector is moving towards a negative bias. That's according to a report titled, “Asia Pacific’s Life Insurance Market Faces a Challenging Outlook For 2012” that the rating agency published today.

“We have revised to negative from stable the outlook on the life insurance sectors in China and Taiwan, and maintained the existing negative outlook on the life sector in Japan” said Standard & Poor’s credit analyst, Michael Vine. In the same vein, we have revised to stable from positive the outlook on the life sector in Korea, and maintained our stable outlooks on remaining life sectors covered in the region--on the basis of ongoing growth prospects and supportive capitalization in those markets.

The move to a negative outlook reflects weakening capitalization and projected lower growth in the short term for China’s life sector, while for Taiwan’s life sector, pressure on capitalization and growth as well as exposure to investment market volatility. Japan’s life sector outlook remains negative for economic and sovereign rating issues, although the sector’s fundamentals are stable with moderate premium growth expected.