APAC's 4% growth is the hard market's last echo

The hard market's last echo shows up in AM Best's composite of Asia-Pacific reinsurers, where net insurance service revenue rose 4% in 2025 after a 2024 decline, with most of the growth coming from overseas business. The forward view is less kind: AM Best predicts a buyer-friendly renewal period in 2026, with abundant capacity and falling rates, and expects continued rate easing on non-loss-impacted treaties in 2027.

The composite's combined ratio ticked up by less than a percentage point to 92% on improved rate adequacy and a relatively benign catastrophe year across Asia, but the profitability rests on the overseas book, which carries a greater concentration of non-proportional treaties and therefore holds onto the favorable pricing that has persisted since the hard market began. That split now runs inside a single region: home markets are turning competitive and soft, while the overseas non-proportional portfolio still looks like 2023.

AM Best's outlook reads like a cedent's wish list. Southeast Asia and India are flush with capacity, a sign of confidence in growth prospects and a symptom of competition, and cedents, the report says, are making selective refinements to their programs and retention strategies—buying more selectively and adjusting retentions to squeeze more efficiency out of each reinsurance dollar—to target greater capital efficiency and earnings stability. Christie Lee, AM Best senior director, notes that the improvement in underwriting profitability since the hard-market inflection is consistent with global trends, though the Asian composite's higher share of proportional treaty business has made the magnitude more moderate.

The MSI-ADI merger is the demand-side shock: a combined Mitsui Sumitomo and Aioi Nissay Dowa may require less reinsurance capacity than the two programs separately, according to AM Best, and Lee says the consolidation will intensify competition among reinsurers, brokers and service providers defending their positions. That leaves reinsurers a choice: follow rates down to protect share, or hold the line and watch the pie shrink. AM Best's composite report echoes its own warning that reinsurers' discipline faces a 2027 test.

The 4% revenue rise is a lagging indicator. Falling rates, the record $705 billion in capital AM Best sees in the global market, a benign catastrophe year that is unlikely to repeat itself, and now a merged buyer that needs less coverage all point to a softer 2026 and a softer 2027. The soft market is splitting by geography, as this publication has argued, and the APAC composite shows the split can also run inside a single region, with overseas business still carrying hard-market pricing while home markets tilt to the buyer's side.