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Industry Report Card: Japan Insurers: After 2019 Weakness Comes Uncertainty

The performance of Japan's insurers weakened in fiscal 2019. The results for major life insurers were within the range of our expectations. Major non-life insurance groups performed worse than we had expected at our most pessimistic, though the impact of this on creditworthiness was limited.

Japan's four major life insurers saw total unconsolidated core insurance profit decrease 4.3% year on year in fiscal 2019 (ended March 31, 2020). This was mainly due to the decrease in insurance-related earnings, including through a downward revision of insurance premium rates.

Consolidated net income for Japan's three major non-life insurance groups fell 14.4% year on year in fiscal 2019. Although losses related to natural disasters decreased, the groups saw reactionary declines in profits as they recorded significant gains from securities sales in the previous fiscal year.

The four major life insurers we rate are Nippon Life Insurance Co., The Dai-ichi Life Insurance Co. Ltd., Sumitomo Life Insurance Co., and Meiji Yasuda Life Insurance Co. The three non-life insurance groups are Tokio Marine Group, MS&AD Insurance Group, and Sompo Holdings Group.

For fiscal 2020, we see a growing likelihood that insurers' operating performances will worsen. The COVID-19 pandemic has roiled financial markets and is pressuring insurers. Core insurance profit at the four life insurers is likely to decline. Insurance-related profit at these insurers is likely to continue to underpin core insurance profit, while interest and dividend income are likely to fall due to declines in interest rates and worsening corporate performances globally. The three major non-life insurance groups are likely in fiscal 2020 to see a year-on-year decline in total consolidated net income. Although fewer natural disasters would be positive for the groups, insurance business performance in Japan and abroad and investment income may come under stronger pressure.

Japan's Four Major Life Insurers

The four major life insurers' aggregate core insurance profit on an unconsolidated basis fell 4.3% year on year to ¥2.62 trillion in fiscal 2019 (see chart 1). Core profit decreased slightly from the previous fiscal year. In terms of revenue, there was an increase in interest and dividend income from foreign securities and domestic stocks. For costs, average guaranteed rates of interest declined as policies with high guaranteed rates matured and insurers set aside additional reserves. Accordingly, positive spreads expanded at some of the insurers (see chart 1). However, they shrank at others as interest and dividend income from foreign securities declined. Meanwhile, Insurance-related earnings--the sum of mortality and morbidity gains and expense margins--declined owing to revised insurance premium rates. As a result, aggregate core profit declined slightly year on year.

The four major life insurers continued to accumulate reserves that count as retained earnings and earned surpluses. They also reduced dividends to policyholders from the previous fiscal year, which reflected a decrease in core profit. In fiscal 2019, some of the four insurers issued subordinated debt that met our criteria for intermediate equity content to enhance their capital. Latent gains on equities shrank materially, reflecting an approximately 11% decline in Tokyo's Nikkei 225 from March 31, 2019, through March 2020. But our credit analysis of each life insurer incorporates a degree of negative impact. To some extent, our assessment of capital takes into account a potential fall in such latent gains on the assumption that stock prices might lose some ground.

As the two charts below show, total core insurance profit at the four life insurers has decreased marginally. This was mainly because of a decrease in insurance-related earnings.

Chart 1a

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Chart 1b

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The four major life insurers have been increasing foreign and other securities to secure yields in a low interest rate environment and to take advantage of strong sales of foreign currency-denominated savings-type products. Meanwhile, there is a growing likelihood that economic-based capital requirement regulations will be introduced. The four life insurers have therefore been increasing the size of their domestic public bond portfolios at a faster speed, aiming at maintaining or reducing interest rate risk (see chart 2). The decrease in domestic equities is attributable to a decline in market prices.

Insurers expect unconsolidated core insurance profit to decline in fiscal 2020 year on year because they anticipate that positive interest spreads will shrink. Although average guaranteed rates of interest have been declining, low interest rates in the domestic and foreign market are likely to persist, which will lower coupon income. In addition, equity dividends are likely to decrease as corporate performances worsen. Therefore, life insurers should continue looking at where to reinvest funds from maturing domestic government and corporate bonds with relatively high yields. They face several constraints: management of assets and liabilities, maintaining yields, foreign currency risk, and hedging costs. However, securing yields amid low interest rates in Japan and abroad is increasingly challenging. The four life insurers may need to shift toward asset classes of relatively high returns against risks, such as credit investments, in our view.

We expect insurance-related earnings to remain either flat or be a tad lower year on year for some time. An increase in third-sector business (which includes policies for matters such as nursing care and medical treatment) is likely to enable mortality and morbidity gains to provide support to insurance-related earnings, but we expect a decline in in-force policies, mainly for death protection, to pull down earnings. In addition, sales of foreign currency-denominated savings-type products, which had been strong, are likely to remain weak in fiscal 2020 amid a material decline in interest rates in the U.S. and Australia. This raises risk related to expenses and interest profits. We expect COVID-19 to have extremely limited impact on insurer payments of claims, given the number of confirmed infections and deaths in Japan. On the other hand, COVID-19 will have a material impact on new policies. The four major life insurers have suspended face-to-face marketing activities, which were their main sales channels, to prevent the spread of the virus. This may be a short-term positive factor for profits, in terms of accounting, because the decrease in new policies will reduce acquisition costs, which are expensed immediately under JGAAP. However, this may be offset by an increase in allowances to marketing staff. In the medium- to long-term, it will also put additional pressure on insurance-related earnings, in our view.

The charts below show interest income from domestic bonds has been decreasing, despite an increase in the amount of government and corporate bonds held to maintain or mitigate interest rate risk.

Chart 2a

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Chart 2b

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The main risks that the four major life insurers face for now are interest rate risk and risk from domestic stock price volatility. The companies are exposed to currency risk in their income statements because they receive most of the interest income from foreign securities in foreign currencies. Interest and dividend income from foreign securities and dividend income from domestic stocks account for a growing proportion of overall income. This reflects changes in the ratio of asset allocation and low interest rates in Japan (see charts 2a and 2b). Furthermore, interest spreads have become more volatile because the COVID-19 pandemic has led to lower interest rates and worsened corporate performances globally. We are therefore now seeing wide variations in dividends on domestic and foreign stocks and in dividend and redemption gains on other securities.

We do not expect interest rate risk to diminish substantially over the next 12 months. The insurers continue to curb fresh underwritings of yen-denominated savings-type insurance products by lowering their guaranteed rates of interest or suspending sales of such products. We see two reasons why this type of risk is unlikely to subside. First, in order to maintain yields, the insurers have no option other than to target foreign-currency-denominated bonds with short durations when reinvesting a portion of repayments and dividend and coupon incomes received on yen-denominated interest-bearing assets in their existing portfolios. Second, a lower surrender-and-lapse ratio for residual debt insurance policies could lengthen the duration of their liabilities.

We intend to closely monitor increases in risk volume. The Federal Reserve in the U.S., the European Central Bank, and other central banks have implemented ultralow or negative interest rate policies, which has lowered yields on government bonds issued in developed countries. Major life insurers have therefore invested more in bonds rated in the 'BBB' category, which have relatively higher yields. The increase in such bonds will continue to bring about a gradual increase in risk volume. The increase in risk stemming from additional stock purchases has so far been limited. However, stock market volatility and the associated risk are growing in Japan and abroad.

Major life insurers are likely to work to avoid foreign currency risk. Although exchange rates have been stable, uncertainty is growing, and short-term interest rate declines in the U.S. and Europe have reduced the cost for hedging. In addition, insurers are likely to control foreign currency risk through currency options, while curbing option expenses through what is known as collar trading (see charts 3a and 3b). This sort of trading involves offsetting premium payments to buy put options with premium income for selling call options. Disclosures suggest that they are already collar trading. While the scale of such trading is not large now, it could grow. Also, this method of option trading might help reduce risk volume, but its ability to constrain earnings volatility depends on exercise prices, which are undisclosed.

We have not seen significant increases in the insurers' holdings of alternative assets to a degree that impacts credit quality. Alternative assets include investments in hedge funds, private equity, infrastructure funds, securitized products such as collateralized loan obligations, and bank loans, and real estate. However, while yields on bonds with strong creditworthiness have been declining, we will keep paying attention on future developments of their shifting funds to such asset classes.

Chart 3a

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Chart 3b

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Japan's Three Major Non-Life Insurance Groups

The three major non-life insurance groups' business performance in fiscal 2019 weakened more than we had expected. The groups recorded ¥525.3 billion consolidated net profit in aggregate, down 14.4% year on year. A decrease in losses from domestic catastrophe and overseas business contributed to earnings. However, a reaction to a material increase in stock sales proceeds in the previous fiscal year led to a decrease in overall earnings from the previous year. However, the non-life insurance groups' results for fiscal 2019 do not fully reflect market-related losses triggered by COVID-19; overseas subsidiaries closed their accounts on Dec. 31, 2019.

We believe substantive sources of accumulated earnings remained as low as in the previous fiscal year. Following large natural disasters and a material decline in prices of domestic stocks and securities in fiscal 2019, catastrophe loss reserves and price fluctuation reserves were drawn down on a net basis. Furthermore, each group announced its intention to maintain or increase stock dividends. We therefore estimate increases in accumulated earnings were quite limited (see chart 4).

The groups may perform worse year-on-year in fiscal 2020. The pandemic has triggered financial market volatility and insurance business uncertainty. The Sompo and MS&AD groups have announced forecasts for fiscal 2020, but the Tokio Marine group says too much uncertainty remains for now.

We expect the non-life insurance groups to continue receiving support from both non-life and life insurance business. The upward revision of the pure reference rate, which is used as a guideline for determining fire insurance premium rates, will help improving their profitability. The General Insurance Rating Organization of Japan raised the pure reference rate for fire insurance by 5.5% on average in May 2018, because of an increase in natural disasters. It again raised the reference net rate in October 2019 by 4.9% to reflect the increase in claims payments for typhoon and flood damages in recent years. These upward revisions in the pure reference rate enable insurers to raise premium rates for fire insurance, thereby improving their profitability. In addition, earning will be supported if losses related to natural disasters in Japan will in fiscal 2020 normalize. In the life insurance business in Japan, lower interest rates at home and abroad will likely lead to a decrease in sales of savings-type products denominated in yen and foreign currencies. However, insurance groups will likely retain the policies in force.

Meanwhile, the International Monetary Fund (IMF) estimates a -5.2% change in Japan's economy in fiscal 2020. This may be pushed down further. Under these economic circumstances, we see a certain degree of risk that new policies, including those for auto and casualty insurance, will deteriorate. New contracts for insurance products targeted at small- and medium-size enterprises in Japan are unlikely to increase, because there are growing concerns over cash management as COVID-19 has constrained economic activity through measures such as voluntary stay-home advisories. For the same reason, contracts for new types of insurance products are unlikely to grow. Furthermore, reinsurance premium rates have in April increased in response to massive losses relating to natural disasters in Japan for two consecutive fiscal years, 2018 and 2019, by 15–25% and 30-50% respectively, according to Willis Re. Such an increase in the reinsurance premium rates will continue to lower earnings at the non-life insurers. In addition, a weakening of the entire corporate sector will lower dividends in their equity portfolios.

Non-life insurance group overseas business is likely to weaken overall performance for fiscal 2020, in our view. We believe overseas business growth at the three groups is likely to slow down. We base this on forecasts from the IMF and other agencies, which predict material economic slowdowns in the regions where the three groups operate.

We see a risk of an increase in claims payments relating to entertainment insurance, for two reasons. First, although lockdown measures have been lifted in many regions, the pandemic is still far from over in places such as Brazil. Second, governments are likely to impose lockdowns when the second wave of the pandemic emerges. Insurers may also see payments of claims for business interruption insurance rise, depending on state/province legislation in North America and developments of lawsuits seeking for business interruption insurance claims in the U.K. and Europe. In addition, losses relating to investments, including credit investment and equities held by overseas subsidiaries, could be a risk factor. In fiscal 2019, the groups booked goodwill impairment losses relating to their consolidated overseas subsidiaries and equity-method subsidiaries. Goodwill impairment related to acquisitions do not directly affect our analysis because we completely deduct goodwill from our calculation of total adjusted capital (TAC). However, we may lower our expectation of the earnings contribution the acquired overseas entity might make, thereby potentially hurting our credit assessment. This is because goodwill impairment loss indicates that the future profitability has declined from the level initially expected.

The charts below show retained earnings at the groups in fiscal 2019.

Chart 4a

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Chart 4b

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Economic solvency ratios have deteriorated at the groups. The ratios will likely remain under pressure amid market uncertainty. Sompo group's economic solvency ratio remains higher than the group considers necessary. However, the ratios at the Tokio Marine and MS&AD groups have declined to levels near the bottom of the ranges they have set (see chart 5). Stock market declines and sales of strategically held stocks are positive factors. Enhancement of their capital by hybrid bond issuance also supported economic solvency ratios. However, the insurers faced headwinds such as: a decrease in latent gains relating to catastrophe reserves and equities; lower interest rates; a surge of credit spreads in the U.S.; and an increase in intangible assets, such as goodwill, by acquisitions. These factors more than offset supporting factors, in our view.

Despite uncertainties over fiscal 2020 performances, shareholder expectations for better capital efficiency are likely to lead to continued strong pressure for higher returns. Therefore, our analysis will continue to focus on how each non-life insurance group balances retained earnings and shareholder returns and on any cumulative effects of large acquisitions and their minor investments in overseas insurance companies.

Chart 5

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Japanese equities and natural disasters are likely to remain the main risk factors the three non-life insurance groups face. The groups continued to sell strategically held stocks, which helped improve the quality of capital and reduce risk. As such, our base-case scenarios incorporate the groups' plans to continue selling strategically held stocks; and our assessment of each insurance group's capital and earnings reflect them to a degree. In fiscal 2020, the groups have said they plan to sell strategically held stocks in amounts upward of ¥100 billion; actual sales will depend on market conditions. This would follow a year of accelerated sales of strategically held stocks, by which the groups steadily turned to less risky assets and realized latent gains.

The insurers are likely to continue to reduce exposure to domestic stocks, which tend to have low returns relative to the risk, while reallocating more resources to overseas businesses in the longer term to achieve higher returns relative to risk. Expanding overseas operations remains a basic policy of the insurance groups. Indeed, fiscal 2019 saw sporadic cases of large acquisitions, and bolt-on acquisitions (acquiring and growing smaller businesses) to complement existing lines of business and equity-method investments by the groups in their pursuit of expanding their overseas insurance businesses.

Domestic risk associated with natural catastrophes is unlikely to increase materially. This is because of prudent underwriting practices; and because insurers assumed larger losses than before from natural disasters in Japan and have bolstered reinsurance coverage, even while the reinsurance premium rate continues to rise. Risk associated with natural catastrophes overseas is likely to continue to increase due to major non-life insurers' organic growth and expansion outside Japan through acquisitions. Nevertheless, the insurers are likely to somewhat curb growth of overall risk after considering diversification effect. We base this view on their efforts to increase the geographic and business diversity and to continue developing more sophisticated risk management systems.

Issuer Review

Table 1

Company/Issuer Credit Rating/Comments Analyst
Nippon Life Insurance Co. (Financial Strength Rating: A+/Stable; Issuer Credit Rating: A+/Stable/--)
On a consolidated basis, Nippon Life's premiums and other revenue declined 5.8% year on year to ¥5.7193 trillion, while its net income declined 31.1% to ¥192.1 billion. The decrease is mainly attributable to: a decrease in sales of foreign currency-denominated insurance products and underwriting of new group annuity insurance; the negative impact of the strong yen at its Australian subsidiary, MLC; and a decrease in sales of group insurance. Sales of foreign currency-denominated insurance products increased at Nippon Wealth Life Insurance, but they decreased at Nippon Life and Taiju Life because of the decline in overseas interest rates. Groupwide core insurance profit declined 9.8% to ¥695.8 billion, mainly due to a decrease in insurance-related earnings at Nippon Life and Taiju Life caused by the downward revision of insurance premium rates; a decrease in Nippon Life's interest margin because the stronger yen shrunk interest on foreign bonds; and an inflated initial investment in launching Hanasaku Life Insurance Co. Ltd. In the overseas business, the group recognized ¥40.8 billion of goodwill impairment loss on a consolidated basis, following the weaker performance of MLC. This will not affect the group's capital in our analysis, because we deduct goodwill from our calculation of capital. However, we will continue to monitor developments closely, because it suggests deterioration of the group's profitability in future. Eiji Kubo
Taiju Life Insurance Co. Ltd. (Financial Strength Rating: A/Stable; Issuer Credit Rating: A/Stable/--)
See comments above. Eiji Kubo
Nippon Wealth Life Insurance Co. Ltd. (Financial Strength Rating: A/Stable; Issuer Credit Rating: A/Stable/--)
See comments above. Eiji Kubo
The Dai-ichi Life Insurance Co. Ltd. (Financial Strength Rating: A+/Stable; Issuer Credit Rating: A+/Stable/--)
Dai-ichi Life Group's consolidated premiums and other revenue decreased 9% to ¥4.8854 trillion. Net income fell 86% to ¥32.4 billion. We revised the outlook on The Dai-ichi Life Insurance Co. Ltd., the core operating company of the group, down to stable in March 2020. The outlook revision was based on our view that the COVID-19 pandemic has increased uncertainty around financial markets, thereby reducing the likelihood that the company will further strengthen its capitalization. Our analysis incorporates to a certain degree: a decrease in new contracts due to weaker sales of foreign currency-denominated products, stemming from suspension of sales of corporate owned life insurance and lower interest rates in overseas markets; market value adjustments that push down accounting profit at The Dai-ichi Frontier Life Insurance Co. Ltd.; dividend payments to shareholders funded by group's adjusted profits (the group's announced amount is about ¥250 billion in real terms, while our estimate is about ¥230 billion). We view the group's initiatives looking forward the introduction of economic value-based capital regulation as positive for its creditworthiness. The initiatives should reduce market risk by downsizing equity portfolio and reduce risk on the liability side by ceding policy blocks. Our analytical focal point in fiscal 2020 will be the group's initiatives for capital enhancement. Tomomi Narimatsu
Sumitomo Life Insurance Co. (Financial Strength Rating: A+/Stable; Issuer Credit Rating: A+/Stable/--)
Sumitomo Life earned ¥2.4467 trillion in consolidated premiums and other revenue, down 6.1% year on year, mainly because unconsolidated revenue sank 7.5% to ¥2.2243 trillion on shrinking sales of single-premium whole life insurance policies. Groupwide core insurance profit declined 1.3% year on year to ¥392.5 billion and consolidated net income dropped 89% to ¥5.2 billion. The decrease in groupwide core insurance profit is attributable to a 7.4% decrease in insurance-related income, which stood at ¥267.5 billion, even though Sumitomo Life's unconsolidated positive spread increased 26% to ¥96.5 billion. Its appetite for investment risk is limited even amid persistent low interest rates. In particular, it adheres to a very conservative hedging strategy against foreign currency risk. Such risk management strategy is among the key factors supporting our ratings. Meanwhile, while lower interest rates in Japan and abroad have been putting downward pressure on investment yields, foreign equities and other securities have been growing at faster speed. Furthermore, the investment risk amount in the regulated solvency margin ratio increased 9.6% year on year, in spite of a plunge of stock prices in the fiscal year end. Signs of risk rising and its potential persistence will be an important focal point for us. Eiji Kubo
Meiji Yasuda Life Insurance Co. (Financial Strength Rating: A+/Stable; Issuer Credit Rating: A+/Stable/A-1)
Meiji Yasuda Life saw its consolidated premiums and other revenue drop 5.5% year on year to ¥2.9118 trillion due to reduced sales of foreign currency-denominated single-premium insurance policies at Meiji Yasuda Life. Meiji Yasuda Life's unconsolidated premiums and other revenue also declined 6.4% year on year to ¥2.5933 trillion. Groupwide core insurance profit rose 0.3% to ¥635.5 billion, mainly due to increased interest and dividend income and growth and expansion of StanCorp. Consolidated net income dropped 9.5% to ¥207.8 billion mainly due to an increase in appraisal loss from securities resulting from the fall in stock prices. Meiji Yasuda Life has been accumulating equity-like reserves and continued to issue hybrid bonds in recent years. In September 2019, the company issued new subordinated bonds worth ¥80 billion. Following these capital enhancement actions, we raised the financial strength and long-term issuer credit ratings on the company by one notch to 'A+' in October 2019. An increase in interest and dividend income from foreign securities have contributed to investment profits in the past several years. Because growing uncertainties stemming from COVID-19 are likely to affect the company's interest and dividend income and unrealized gains/losses from securities, the capability to control market risk will become increasingly important at the company, in our view. Kentaro Mukoyama
Meiji Yasuda General Insurance Co. Ltd. (Financial Strength Rating: A+/Stable; Issuer Credit Rating: A+/Stable/A-1)
See comments above. Kentaro Mukoyama
Tokio Marine & Nichido Fire Insurance Co. Ltd. (Financial Strength Rating: A+/Stable; Issuer Credit Rating: A+/Stable/A-1)
Tokio Marine Group's net premiums written (non-life insurance) inched up 0.3% (or 4.1% if excluding the effect of sales of reinsurance subsidiaries in the previous fiscal year) year on year to ¥3.5983 trillion. Life insurance premiums declined 6.8% year on year to ¥981.9 billion. Although hit by sizable natural disasters in Japan, claims payments declined year on year, and investments in North America performed favorably. Meanwhile, the group made provisions of catastrophe reserves (including special provisions) for domestic disasters and added provisions of reserves in North America. As a result, net income was down 5.4% to ¥259.7 billion. In April 2020, we revised the outlook on the ratings on core operating companies of Tokio Marine group down to stable. We made the revision because we see more downside risks to the group's capital and earnings after considering financial uncertainty and volatility brought about by the pandemic. The group's capital buffer declined in fiscals 2018 and 2019, mainly because of the impact of large domestic natural disasters. In addition, we consider the volatility of capital will increase because the group's exposures to domestic equity and credit risk in North America are relatively large. In fiscal 2020, we believe the impact on the insurance underwriting earnings will be limited, because we see both positive and negative factors. However, a rise in reinsurance costs, a decline in interest and dividend income, and a possible expansion of unrealized losses on securities will require close attention. The impact of natural disasters will continue to affect the group. As such, we consider the key factor will be the group's capital policy, including risk management and shareholder returns. Toshiko Sekine
Tokio Marine & Nichido Life Insurance Co. Ltd. (Financial Strength Rating: A+/Stable; Issuer Credit Rating: A+/Stable/--)
See comments above. Toshiko Sekine
Mitsui Sumitomo Insurance Co. Ltd. (Financial Strength Rating: A+/Stable; Issuer Credit Rating: A+/Stable/A-1)
Net premiums written (non-life insurance) of MS&AD Insurance Group inched up 2.1% year on year to ¥3.5737 trillion. The increase is attributable to favorable sales of fire, automobile, and new types of insurance at the group's domestic non-life subsidiaries. Life insurance premiums declined 20.4% to ¥943.7 billion, due to the decrease in sales of foreign currency-denominated products, stemming from lower interest rates overseas. Net income was down 25.8% to ¥143 billion because the group set aside additional catastrophe reserves and suffered as stock prices declined amid the pandemic, even though claims payments relating to natural disasters declined from the previous fiscal year. For fiscal 2020, the group forecasts net income of ¥130 billion, down 9.0% year on year. This incorporates a decrease in investment profits and insurance claims incurred by MS Amlin due to the pandemic, while natural disasters in Japan will be normalized. We consider that the group has strong capital commensurate with the rating. However, we recognize several risk factors, including the possibility of further expansion of the impact of the pandemic on insurance business and financial markets, potential natural disasters, and unpredictable losses from overseas business. Koshiro Emura
Aioi Nissay Dowa Insurance Co. Ltd. (Financial Strength Rating: A+/Stable; Issuer Credit Rating: A+/Stable/A-1)
See comments above. Koshiro Emura
Mitsui Sumitomo Primary Life Insurance Co. Ltd. (Financial Strength Rating: A+/Stable; Issuer Credit Rating: A+/Stable/--)
See comments above. Koshiro Emura
Sompo Nipponkoa Insurance Inc. (Financial Strength Rating: A+/Stable; Issuer Credit Rating: A+/Stable/--)
The Sompo Holdings group's net premiums written (non-life insurance) increased 3.9% year on year to ¥2.8254 trillion, owing primarily to steady growth of non-life insurance business at home and abroad. Sompo Japan Nipponkoa Insurance's unconsolidated net premiums written rose 1.7% to ¥2.1847 trillion. The group's life insurance premiums edged up 1.8% to ¥356 billion. Net income fell 16.4% to ¥122.5 billion, because sales proceeds of strategically held stocks decreased, while the impact of domestic natural disasters receded. For fiscal 2020, the group forecasts its net income will rise 22.4% to ¥150 billion. While the group expects an increase in business expenses in response to the spread of COVID-19 and a decrease in interest and dividend income, it incorporates normalization of losses from natural disasters and growth of each business. Although the group's revenue structure remains vulnerable to natural disasters and market volatility, its diverse business base and strong enterprise risk management framework will support earnings. The key points in our analysis will be how the group maintains and improves earnings amid the occurrence of sizable natural disasters; the scale of impact of COVID-19; and the group's capital policy, including shareholder returns. Kentaro Mukoyama
Sompo Himawari Life Insurance Inc. (Financial Strength Rating: A+/Stable; Issuer Credit Rating: A+/Stable/--)
See comments above. Kentaro Mukoyama

Related Research

This report does not constitute a rating action.

Primary Credit Analyst:Eiji Kubo, Tokyo (81) 3-4550-8750;
eiji.kubo@spglobal.com
Secondary Contacts:Toshiko Sekine, Tokyo (81) 3-4550-8720;
toshiko.sekine@spglobal.com
Kentaro Mukoyama, Tokyo (81) 3-4550-8775;
kentaro.mukoyama@spglobal.com
Koshiro Emura, Tokyo (81) 3-4550-8307;
koshiro.emura@spglobal.com
Tomomi Narimatsu, Tokyo (81) 3-4550-8667;
tomomi.narimatsu@spglobal.com

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