Smooth sailing for Japanese insurers at April 1 reinsurance renewals

Lower rates were secured and negotiations proceeded smoothly for Japanese insurers at the April 1 reinsurance renewals, local insurers and reinsurers said.

Cedents in Japan had accepted big rate increases and tougher terms during 2023's renewal season.

The impact of January's Noto earthquake was limited and reinsurers' strong underwriting appetite for earthquake reinsurance programs remained unchanged, a Sompo Holdings Inc. spokesperson wrote in an email to S&P Global Market Intelligence. The reinsurance market offered rate increases initially, but softened as negotiations progressed, and in general, renewal negotiations were smoother than last year, the spokesperson added.

Agriculture insurer National Mutual Insurance Federation of Agricultural Cooperatives, also known as Zenkyoren, managed to lower reinsurance rates for the new fiscal year that started April 1 from the previous year's levels, a spokesman said. The risk of natural disasters and inflationary pressure have "eased" for the current fiscal year, he added. In the previous year, Zenkyoren reached an agreement with a reinsurer on a premium increase of below 20%, reflecting the overall market trend.

Reinsurers weigh in

RenaissanceRe Holdings Ltd. CEO Kevin O'Donnell said in the company's first-quarter earnings call that the Noto earthquake did not have a significant influence on the April 1 renewals and programs generally renewed in an orderly manner, noting the low population density and resilient infrastructure in the areas affected by the quake.

"We have strong relationships in Japan, and we're successful in renewing our combined lines at rates, which were flat to down 5%," O'Donnell said. "Rates online in Japan tend to be low. So such a small shift in price does not significantly impact either top or bottom line."

While Hiscox Ltd. saw reinsurance rates fall slightly in the Japanese renewals, CFO Paul Cooper said in the company's latest trading statement call that they remain adequate. Hiscox is "pleased" with the rates it obtained, as well as with general terms and conditions, Cooper added.

As with Sompo, there was no significant change in risk appetite among reinsurers, the Sompo spokesperson said, adding that while some reinsurers reduced capacity, the supply exceeded the company's demand. "It [is a ] sign that the market may be softening in the future," the spokesperson said.

MS&AD Insurance Group Holdings Inc. declined to comment, saying that "the details of renewal on 1st April cannot be disclosed as this is strictly confidential information." Tokio Marine Holdings Inc. did not answer questions sent by S&P Global Market Intelligence. The Toa Reinsurance Co. Ltd., Japan's biggest reinsurer, declined to comment.