Tokio Marine’s international units set to stall on premiums, soar on profit

Japanese insurer  Tokio Marine suffered a 28% decline in non-life profits from its international units in the fiscal year ended March 31 in constant-FX, as Asian markets delivered a notable loss and fledgling profits in Europe faltered.

Profits grew handily in North American units, however, up 14.3% year on year in constant FX with double digit gains visible for two of the three main groups.

Underlying earnings gains (excluding nat cat impacts and FX effects) at the international units should deliver about half of the expected 9.9% increase in group net profit over the 2023 fiscal year, despite weaker prior year reserve development, Tokio Marine said in forecasts.

For the full-swath of foreign units, expect a 72% year on year increase in non-life profits as Asia swings back to modest profits on reversal of the effect of COVID-19 in Taiwan worth ¥107 billion, Europe springs to life, "disciplined" underwriting delivers solid performance all around and investment income rises with the new interest rate environment, management said.

But premium growth will largely be absent from that earnings picture. Net earned premium growth will fall to a 2.5% pace for f2023 in non-life after having grown 14.2% in the year just completed.

That slowdown includes an outright stalling of net earned premium in North America after having hit a double-digit pace in f2022.

For the Philadelphia Companies, net earned premium growth will slow to a fractional 0.4% with management blaming reinsurance costs. For Delphi, growth of 3.1% is well below 14% in the prior year.

In its place, the infant European operations become a growth engine, the only geography expected to hold double-digit net earned premium growth in constant FX. Management expects gains from rate increases and expanded underwriting mainly from property lines.

Expect 6.1% growth from south and central America where Tokio Marine believes it will outpace the broader market. Expect 5.9% in Asia and Oceania where Tokio Marine hopes for a post-pandemic economic recovery.

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