Asia-Pacific insurers have bounced back from the significant losses of 2011, with fewer large-scale catastrophes allowing them to rebuild balance sheets, Aon Benfield says.

Markets have slowly recovered after the natural disasters of that year, with strong economic growth contributing to an increasingly stable environment, according to the global reinsurance broker’s annual Evolving Criteria report.

This has been supported by an inflow of investments, market liberalisation and expected high premium growth in regions with low insurance penetration.

However, these strengths are offset by persistent low interest rates, tightened regulation and possible economic slowdown in China.

These create “a level of uncertainty… which makes operating conditions somewhat more difficult”, Aon Benfield Analytics Asia-Pacific COO Rade Musulin says.

“However, whereas last year was dominated by ratings downgrades as a result of the 2011 catastrophic losses, this year has seen a rebound in upgrades, reflecting the re-strengthening of companies’ balance sheets.”

The report analyses the latest developments in ratings agency protocol and the impact on the insurance industry.