Japan P&C insurers shake off stock market volatility with strong FY 2024 start

The top three Japanese property and casualty insurers reported solid earnings at the start of fiscal 2024, helping fend off the impact of a stock market shock in early August.

Shares of Tokio Marine Holdings Inc., MS&AD Insurance Group Holdings Inc. and Sompo Holdings Inc. fell sharply along with global markets on Aug. 5 after interest rate hikes by the Bank of Japan.

The insurers have since rebounded as markets recovered, booking strong profit and premium growth for the three months to June 30 on the back of good performances from their international businesses.

MS&AD 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 ¥204.27 billion. The insurer also had the largest growth in group adjusted profit, which increased by ¥83.7 billion year over year to ¥197.3 billion, driven by strong domestic non-life insurance and international business.

Meanwhile, Tokio Marine's net income attributable to owners of the parent rose 54.2% year over year to ¥197.32 billion. Adjusted net income increased by ¥68.8 billion year over year to ¥233.4 billion, thanks 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 logged the smallest gain in net income in the fiscal first quarter among the three banks, at 20% year over year to ¥120.04 billion. Adjusted consolidated profit was "largely unchanged" from the prior-year period at ¥80.3 billion as profit growth from overseas business countered the impact of natural disasters in Japan, according to an investor presentation.

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Strong overseas premium growth

All three Japanese insurers experienced solid growth in net written premiums from their overseas businesses, with Sompo reporting the largest net premiums written from its overseas consolidated subsidiaries at ¥626 billion.

Tokio Marine had the second biggest net premiums written from its international business at ¥618.4 billion in the fiscal first quarter, up year over year from ¥511.80. 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, which was attributed to an increase in new businesses, share expansion at it MS Reinsurance subsidiary and the impact of foreign exchange. Net premiums written from its overseas insurance subsidiaries climbed ¥135.6 billion to ¥534.10 billion.

The home front

The three insurers' domestic P&C businesses lagged compared to their overseas business in terms of net written premiums growth. Sompo Japan's net written premiums declined slightly year over year to ¥591.60 billion in the fiscal first quarter from ¥597 billion.

Of the three insurers, MS&AD recorded the largest net premiums written from Japanese P&C businesses during the period at ¥762.10 billion, slightly up from ¥737.70 billion. An 18.9% growth in net premiums written in fire and allied largely contributed to the increase based on the company's earnings data.

Net premiums written from Tokio Marine's Japanese P&C business slightly increased to ¥680.2 billion from ¥667.40 billion due to rate and product revisions in auto and fire insurance.