Japan's top P&C insurers still enjoy strong results amidst pandemic

Solid premium growth was backed by premium rate hikes in 2019.

Japan’s top three property & casualty (P&C) insurers recorded robust results for the fiscal year ended March 2020, but these are yet to wholly reflect the effects of the pandemic, a Moody’s report said.

MS&AD Insurance Group, Sompo Holdings, and Tokio Marine Holdings reported solid premium growth driven by premium rate hikes in 2019, and widened coverage on existing auto policies and stronger sales of packaged insurance products to SMEs, said senior analyst Soichiro Makimoto.

"However, looking ahead, we expect the coronavirus-led downturn will weigh on profitability through slower or even contracting premium growth, reduced investment income and increased claim payments, such as from event cancellation insurance and business interruption insurance, but we expect the overall impact to be manageable," he added.

The three insurers’ underwriting services were still profitable in FY2019 despite record-high catastrophic woes. Domestic combined ratios were below 100%, whilst combined ratios that exclude natural disasters, which resulted in high claims, were also making bank at a level of just above 90%.

Their realistic net profits recovered from a drop in the previous year, and they continue to benefit from reinsurance programmes to manage their catastrophe risk, the report said.

Economic solvency ratios (ESRs) also remain elevated and within their respective targets, anchored by continuous internal capital generation and efforts to cut holdings of domestic stocks.