Asian insurer gains face regulatory pressure in second half of 2026

China-Hong Kong fund movement rules could become more restrictive during the period.

Asian insurers reported positive earnings, but CreditSights expects several challenges to weigh on the sector in the second half of 2026, including tighter regulation of China-Hong Kong cross-border fund flows, increased competition in South Korea’s health insurance market and modest solvency levels amongst Taiwanese insurers.

In its APAC Financials: 2H26 Outlook and Preferred Trades report, CreditSights said Hong Kong insurers recorded growth in value of new business (VNB), whilst Japanese insurers saw higher revenue and South Korean insurers reported increased net income. 

However, the firm said some underlying issues remained. Core earnings amongst Japanese insurers are declining, whilst Hanwha continues to rely on investment income. 

CreditSights also pointed to gaps in capital transparency amongst Taiwanese insurers.

Japanese life insurers remain CreditSights’ preferred pick, supported by strong solvency positions and rising interest rates.

The report also said profitability would remain uneven across Asian banks.

South Korea, mainland China, Singapore, Australia, Japan and India were considered better placed, as pressure on net interest margins eases. 

However, loan growth is expected to remain relatively weak in most markets, whilst market volatility could put pressure on non-interest income.

Credit costs are expected to remain flat or rise as banks build reserves and overlays against macroeconomic uncertainty. 

Non-bank financial institutions have performed well, although CreditSights expects some moderation.