One of the challenges for Australian insurers in a softening market is to find growth opportunities, but Ian Thompson, Standard & Poor’s (S&P) MD, Corporate and Government Ratings, believes those opportunities will emerge in Asia as foreign parents consider subsidiaries’ falling profits.

Opportunities may come from markets in Asia where there are too many insurers and consolidation opportunities are emerging, he said last week.

“It can mean an acquisition of other companies. Similarly, when you go into a tightening cycle foreign parents may review the attractiveness of the market. Therefore there could be some opportunities.”

Mr Thompson says a number of Australian insurance companies are very well capitalised and “have stated they are interested in looking at opportunities as they may arise. You do have some of the conditions that are conducive for consolidation.”

Releasing S&P’s annual Asia-Pacific insurance outlook, Mr Thompson told Sunrise Exchange News there are still “too many players in Asia; there’s more room for consolidation and that’s the thing we do see continuing”.

The outlook report says the current insurance cycle has passed its peak with price competition taking hold – a trend that’s especially noticeable in commercial property and liability classes.

“Price competition remains the greatest industry risk, and if left unchecked could pose a significant risk of an even stronger erosion of profits,” it says. “Underwriting profits are expected to moderate slightly in 2005.”

Mr Thompson says China and India still have the biggest growth potential in the region.