Manila: Global credit rating agency, AM Best has maintained a stable outlook on the Philippines' non-life insurance segment, citing robust growth prospects driven by economic expansion and a pipeline of large domestic infrastructure projects. In its 'Market Segment Outlook: Philippines Non-Life Insurance' report, AM Best also cited stabilised reinsurance capacity, the emergence of insurance pools to support underwriting capacity, a supportive pricing environment, and investment income that is expected to remain bolstered by a robust domestic interest rate environment.
According to BERNAMA News Agency, AM Best in a statement said offsetting factors include macroeconomic uncertainty, a tighter monetary policy stance, and potential financial market volatility stemming from adverse geopolitical developments. 'Another key potential headwind is the increasingly volatile weather conditions, which are placing significant pressure on non-life insurers and contributing to greater volatility in underwriting results,' said AM Best senior financial analyst, Susan Tan.
The Philippines' economy is expected to grow 4.1 per cent in 2026, according to the International Monetary Fund. The country's non-regulatory landscape continues to develop, with a focus on financial resilience, transparency, and stricter accountability for public infrastructure risk. The mandatory adoption of Philippine Financial Reporting Standard 17 (PFRS 17), the Philippine equivalent of IFRS 17, remains on track for implementation on Jan 1, 2027.
In a move expected to have positive implications for capital management, the country's Insurance Commission has expanded its definition of 'admitted assets' to include real estate investment trusts and selected structured products to provide insurers with greater flexibility to meet their risk-based capital requirements.
According to the report, the Philippines' non-life market continues to undergo pricing recalibration, particularly in property lines, driven by the need to address persistent inflation, rising claims costs, and the increasing frequency and severity of climate-related risks. While premium growth remains positive, profitability is exposed to volatility due to the country's high exposure to natural catastrophes such as typhoons, floods, and earthquakes. The increase in net retention of catastrophe risks by primary insurers over recent periods has been a strategic response to balance high reinsurance costs with profitability targets.