European insurers told to expand business in Asia

 Moody's Investors Service said in a release on Tuesday that the current presence is too small to affect their overall financials, and thus their credit profiles.
 "Nevertheless, we believe that over the longer term, European insurers' credit profiles might benefit from a
profitable expansion in Asia, due to the added geographical diversification and profitability benefits that this would bring to their portfolios," said Antonello Aquino, a Moody's Senior Vice President.
 Abrupt regulatory changes and embedded product guarantees have been amongst the obstacles for the successful expansion in Asia ex-Japan of international insurers so far.
 "Many European insurers retreated from Taiwan between 2008-10, for example, because of the high level of product guarantees offered in this market. More recently, legislation changes in India have led to a decline in life sales. As a consequence, and perhaps more than in other regions of the world, the ability to manage regulatory
environments, maintain product innovation and control distribution are the hallmarks of successful insurers in Asia ex-Japan," he said.
 According to the report, European insurers' overall market share in Asia's (ex-Japan) life insurance market remains limited, at just below 10% of the total regional annual premium equivalent in 2010.
 Moody's analysis suggests that the profit contribution from Asia ex-Japan remains modest for most European insurers, with the exception of Prudential Plc, which has a substantial presence in most major markets in the region.
 The rating agency highlighted that certain countries in the region are much more attractive to European insurers than others. While Asia ex-Japan collectively is a large and fast-growing life insurance market, European insurers are likely to find large variations in business attractiveness and ease of access across economies.
 In Moody's view, Vietnam, Indonesia, the Philippines, and Thailand present a higher level of growth potential for foreign insurers in Asia ex-Japan, despite the typical risks associated with emerging-market evolution.