Typhoons put pressure on Tokio Marine, MS&AD, Sompo

The recent run of large natural disasters to hit Japan has put downward pressure on the creditworthiness of the nation's three largest non-life insurance groups, S&P Global Ratings suggested in a briefing.

Following heavy rains in July, typhoon Jebi caused severe damage in western Japan in early September and typhoon Trami then swept across the Japanese archipelago at the end of the month. Japan's three largest non-life insurance groups, Tokio Marine Group, MS&AD Insurance Group, and Sompo Holdings Group, have not yet disclosed losses relating to the two Typhoons, the agency noted.

However, given the typhoons' sizes and paths, S&P assumes that the three groups may incur losses in the areas of voluntary insurance for automobiles and fire (flood) insurance. Based on this assumption, each group will hold a certain amount of incurred losses up to the "attachment point" (where the reinsurer will step in and pay for the excess), in excess loss cover, according to the agency. Accordingly, the three groups will likely incur additional incurred losses on a net basis from the two typhoons, analysts suggested. Meanwhile, S&P expects an earthquake that struck Hokkaido in September to have a limited impact on the groups.

A series of large natural disasters globally, such as hurricane Florence, which hit the eastern part of the US in the middle of September, and typhoon Mangkhut, which struck the Philippines, China, and Hong Kong may add somewhat to Japanese insurers’ losses. The three group's net incurred losses from these disasters are still unknown but may heighten uncertainty over their profit projections for the current fiscal year, S&P noted.

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