Fitch Ratings has stated that the recent wildfires in Los Angeles are unlikely to impact the ratings of insurers and reinsurers in the Asia-Pacific (APAC) region, as these companies have minimal exposure to the event.
The wildfires, which are expected to result in insured losses between $35 billion and $50 billion, have surpassed previous loss records. Despite this, APAC insurers are largely insulated from the financial fallout, with many having limited direct exposure to the affected areas. Furthermore, APAC insurers have no significant involvement in California’s insurer of last resort, the FAIR Plan.
While rising catastrophe losses are anticipated to drive up reinsurance costs globally, including for APAC-based firms, Fitch notes that strong reinsurance programs will help mitigate the financial impact for these insurers in the short term.
Fitch-rated APAC insurers and reinsurers with potential exposure to the wildfires maintain robust capital positions and diversified risk portfolios, helping to shield their credit ratings from significant damage. Japanese non-life insurers with operations in the U.S. are expected to manage their losses well, given their solid earnings and capital reserves.
In recent years, APAC insurers and reinsurers, including Taiping Reinsurance and QBE Insurance Group, have reduced their presence in the U.S. market in an effort to better manage catastrophe risks. While some companies may still face direct or indirect exposure to the wildfires, Fitch anticipates that any financial impact will stay within the range of their rating sensitivities.
Related topics
