Tokio Marine boosts growth outlook as profits quadruple in fiscal first half

Japanese insurance group Tokio Marine has more than quadrupled its profits in the fiscal first half ending September 30 to ¥269 billion ($2.36 billion) on a 5.3 percent year on year increase in total premiums against a light decline in investment income.

In response, management hiked targets for premium growth in 2021 and profits through the coming years. "Considering current performance, adjusted net income for fiscal 2023 is expected to increase further to far surpass ¥500.0 billion," management said in a statement.

In non-life, net premiums written grew 6.1 percent year on year to ¥1.92 trillion, or 4.5 percent when adjusted for FX, and included 2.0 percent growth in Japan and a headier 9.5 percent in foreign operations.

Premium growth outside of Japan came on "higher than expected rate increases" plus volume expansion, management said in its presentation.

Management upped its forecast for FY growth in net written premiums to 3.8 percent from a prior target of 2.2 percent. Stronger growth is expected from foreign operations, where Tokio Marine now expects 8.6 percent growth for the full-year. Domestic growth forecasts were put at 1.3 percent versus an initial forecast for a flat market for the fiscal year.

The combined ratio was listed down to 92.1 percent for the domestic market on account of lower cat losses. Combined ratios were also listed lower for all major foreign units.

Net incurred losses on natural catastrophes declined by 38 percent year on year to ¥50.2 billion and management gave the full-year projection a minor 3 percent downward tweak.

Life insurance operations brought a 2.0 percent increase in premiums (restated to match the non-life format), or 0.6 percent when adjusted for FX effects.

Growth in foreign life premiums, driven by higher-than-expected rate increases, are more than covering the decline in Tokio's Japanese life business, where corporate cancellations increased, management said.

Following that lead, management revised its forecast for growth in its foreign life business to 5.3 percent from a prior forecast for fractional decline. Premiums in domestic life insurance are still seen down 7.7 percent.