Japan’s top 3 insurers have shaken off a fall in their stock price to report solid earnings results at the start of fiscal year 2024, driven by net premium growth in overseas business.
Shares of Tokio Marine Holdings Inc., MS&AD Insurance Group Holdings Inc., and Sompo Holdings Inc. fell sharply along with global markets on 5 Aug following interest rate hikes by the Bank of Japan.
However, an analysis by S&P shows that the insurers have since rebounded as markets recovered, booking strong profit and premium growth for the three months to 30 June.
MS&AD Insurance Group Holdings Inc. saw the largest increase in net income attributable to owners of the parent in the fiscal first quarter, at 83.0% year over year to ¥204.27bn US$(1.42bn).
The insurer also reported the largest growth in group adjusted profit, which increased by ¥83.7bn year over year to ¥197.3bn, driven by strong domestic non-life insurance and international business.
Tokio Marine Holdings Inc.’s net income attributable to owners of the parent rose 54.2% year over year to ¥197.32bn.
Adjusted net income increased by ¥68.8bn year over year to ¥233.4bn, attributed to strong underwriting results and increasing investment income in Tokio Marine’s international business. Gains from the sale of business-related equities also contributed to the increase in adjusted net income, according to an investor presentation.
Sompo Holdings Inc. logged the smallest gain in net income in the fiscal first quarter among the three insurers, at 20% year over year to ¥120.04bn.
Adjusted consolidated profit was largely unchanged from the prior-year period at ¥80.3bn as profit growth from overseas business countered the impact of natural disasters in Japan, according to an investor presentation.
Overseas business
All three insurers saw solid growth in net written premiums from their overseas businesses. Sompo reported the largest net premiums written from its overseas consolidated subsidiaries at ¥626bn.
Tokio Marine had the second largest net premiums written from its international business at ¥618.4bn in the fiscal first quarter, up year over year from ¥511.80bn. The insurer credited the growth to strong rate increases and new contracts at its North American entities.
MS&AD experienced the largest year-over-year growth in overseas net premiums written, attributed to an increase in new businesses, share expansion at its MS Reinsurance subsidiary, and the impact of foreign exchange. Net premiums written from its overseas insurance subsidiaries climbed ¥135.6bn to ¥534.10bn.
The domestic P&C businesses of the three insurers lagged behind their overseas business in terms of net written premiums growth. Sompo Japan’s net written premiums declined slightly year over year to ¥591.60bn in the fiscal first quarter from ¥597bn.
MS&AD recorded the largest net premiums written from Japanese P&C businesses during the period at ¥762.10bn, slightly up from ¥737.70bn. An 18.9% growth in net premiums written in fire and allied largely contributed to the increase based on the company’s earnings data.
Meanwhile, net premiums written from Tokio Marine’s Japanese P&C business slightly increased to ¥680.2bn from ¥667.40bn due to rate and product revisions in auto and fire insurance.
