Economic headwinds will make it harder for Asia-Pacific insurers to prosper, according to a report by Standard & Poor’s (S&P).

“Previously the world’s ‘hottest’ region, most economies in Asia-Pacific are now grappling with the prospect of slower growth, while the US picks up steam and Europe begins to stabilise,” the ratings agency said.

Downward ratings pressure will be limited because insurers have strong business risk profiles, financial flexibility and liquidity, but there is little chance of improvement, the report says.

“Any positive trend in our ratings on Asia-Pacific insurers is remote, because of the economic uncertainty that may dampen insurers’ operating earnings.”

S&P has issued a stable outlook for Asia-Pacific non-life and life insurers, plus reinsurers.

Non-life premiums are forecast to stay flat after increases last year in markets such as Thailand, New Zealand and Japan.

“Although catastrophe claims have been low recently, we still believe potential for extraordinary natural catastrophe losses is a heightened concern,” S&P says.

The property catastrophe reinsurance market is expected to “remain firm”, although it has softened slightly since events in 2011 pushed up premium rates.

S&P says enterprise risk management is a key tool for Asia-Pacific insurers but it is less developed than in other markets, with the exception of Australia and Japan and subsidiaries of strong parent companies outside the region.

Companies that prudently manage capital, underwriting, investments, reserves and risk management can best capitalise on the region’s growth, despite uncertainty ahead.

“Although insurers face varying degrees of hurdles we also think this region offers favourable growth opportunities that can help insurers become more diversified both geographically and demographically,” S&P says.