Company failures will remain a feature of the Asia-Pacific insurance sector in 2003. That's the according to Standard & Poor's.

S&P expressed concern that as the market battles against negative underwriting, the divide between companies with strong financial strength and those with weak financial strength is growing.

Ian Thompson, credit analyst at Standard & Poor's Asia-Pacific Group said: "The sector is challenging, unsettled, and rife with competition. There are no safe havens anywhere in the region. Even Australia, the most sophisticated market in the region, has seen significant failures, recently suffering near collapse as a reinsurance centre."

Thompson warned that despite consolidation the Asia-Pacific region remains oversubscribed. "Competition is so hot that in many markets, even if the number of players were to halve, it would remain a significant issue for those left," he said.

S&P added that the future of the region is not entirely negative. Thompson added: "Premium growth is generally good. At the same time, bancassurance and direct selling have modernized distribution in the Asia-Pacific market."

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