Tokio Marine races to rescue as Covid slams Taiwanese P&C unit

Tokio Marine will charge in to take control of its endangered Taiwanese non-life unit after a change in Covid policy delivered heavy losses throughout the segment.

Taiwan loosened its long-standing zero tolerance policy regime in April, delivering mass losses for a Covid-based product prevalent in Taiwan that pays a fixed amount following infection or isolation.

The policy change rendered ¥110.1 billion ($816 million) in estimated after-tax losses to the Taiwan unit Newa in which  Tokio Marine to date has taken a minority stake of nearly 49% behind founder and majority owner Yulon Group.

Tokio Marine booked ¥53.9 billion of that loss for its stake.

A structured capital increase will see the Japanese firm's stake rise to nearly 50.2%, handing over operational control.

Tokio Marine “shall acquire major stake oof TMNewa and take initiatives to improve management, including product development and risk management, to capture future stable profit growth in Taiwan,” management said of the new agreement with fellow shareholders.

The loss, an estimate of full-year ultimate losses still to be booked in the company's fiscal second quarter ending September 30, is based on an estimated infection rate of 30% in Taiwan, still some 10 percentage points above the latest official projections,  Tokio Marine CFO Kenji Okada said in the company’s fiscal-Q1 earnings presentation.

Should the infection rate rise to match the 38% now being suffered in South Korea, the leader in the region, another ¥18 billion in losses might be expected, Okada indicated.

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