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2018 Typhoons may impact creditworthiness of Japan’s insurers: S&P

4th October 2018 - Author: Charlie Wood

The recent run of large natural disasters to hit Japan such as typhoon Jebi and typhoon Trami has likely put downward pressure on the creditworthiness of the nation’s three largest non-life insurance groups, says S&P Global Ratings.

s&p-global-logoJapan’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.

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 in excess loss cover. Accordingly, the three groups will likely incur additional incurred losses on a net basis from the two typhoons, S&P believes.

S&P expects an earthquake that struck Hokkaido in September to have a limited impact on the groups.

Furthermore, there’s been large global natural disasters such as hurricane Florence, which hit the eastern part of the U.S in the middle of September, and typhoon Mangkhut, which struck the Philippines, China, and Hong Kong.

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 had previously held the view that the country’s heavy rains in July would have a limited impact on the insurance groups’ creditworthiness, based on an assumption that losses from natural disasters that occur in the rest of fiscal 2018 would be at about the level that each group estimated in their full-year forecasts.

However, S&P believes that the series of large natural disasters that have unfolded since it published that report may weaken each groups’ creditworthiness through downward pressure on our assessment of their capital and earnings.

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