Japan continues to be an attractive, diversifying market from a reinsurance standpoint, said George Sherriff, Chief Executive Officer, Gallagher Re Japan, noting that reinsurers are very well capitalised and entered the April 1st, 2026, renewals still seeking opportunities.
In an interview with Reinsurance News around the largely Japan-focused April renewals, Sherriff said trends broadly consistent with those seen at 1.1, with the market continuing to be characterised by well-capitalised reinsurers seeking pockets of growth amid overall rate softening.
From a Japan-specific perspective, he said that “reinsurers came into the renewal still seeking opportunities. But this is in a market where there is very limited new demand coming in at this renewal. So, with limited demand, and a very well-capitalised reinsurer base, the demand dynamic is going to skew in the client’s favour. That’s point number one.
“Point number two would be that in 2018 and 2019 there was a series of very significant typhoons that hit the market, and that resulted in significant recoveries from the cat XLs. But after that, rates increased, and then we had the global hard market of ‘22 and ‘23, where rates increased again. What we found, generally speaking, is that programmes are now reaching payback, i.e. those losses have now been fully paid back, and therefore clients will be seeking for the post-loss payback loading to be removed. So, that’s the second important dynamic that is specific to the cat programmes.”
Sherriff noted that this year marks the second consecutive year of meaningful double-digit risk-adjusted reductions in the Japanese catastrophe space.
“If we look at cat programs, generally speaking, the Gallagher Re range was -15% to -17.5%, not too dissimilar to what we observed last year. In that sense, Japan has moved ahead of the curve, because from a calendar year perspective it should be following on from 1.1. But last year, 1.4 was already achieving rate reductions more significant than 1.1, and we saw that again this year,” he explained.
He continued, “Per risk was -5% to -15%, and you’ll notice those risk-adjusted movements are lower than on the cat programmes. That’s simply because the exposures were already down, so therefore they are seeing significant premium reductions.
“Casualty was probably risk-adjusted up, increasing by a small amount, but again, this is due to the fact that the exposures were significantly down, so meaningful premium reductions. From our perspective, this is justified by the considerable effort in underwriting remediation.”
Sherriff underlined that a major theme in Japan has been large companies remediating their original portfolios, meaning they are addressing intrinsic issues that have driven profitability challenges in recent years, such as challenging commercial fire results and also challenges coming from the US liability portfolio.
He said, “What they have been doing in recent years is placing huge amounts of focus on significantly reducing limits, pushing rates, increasing deductibles, reducing shares or coming off business that no longer fits their guidelines. So, really driving a very stringent underwriting culture into the market.
“That’s resulted in two things at this renewal. One, results of those subject reinsurance programmes have been very positive. Covering commercial fire, you have property per risk programmes including surplus treaties, and for casualty, you have either standalone liability XLs or combined casualty programmes. And their performance has improved, but the exposures going into those programmes has also significantly reduced. So, in that regard, the risk-adjusted movements for per risk and casualty seem lower than cat, but the real story is in the exposure movement, and therefore associated premium movements for those programmes.”
Sherriff added that improved portfolio performance, combined with very strong reinsurer appetite, has enabled clients to push for higher commissions.
“On property surplus treaties, commissions have increased because the underlying portfolio has improved, and on earthquake quota share treaties, they’ve also increased. Earthquake quota share remains one of the more attractive businesses in Japan. Original rating environment remains very good. Loss history has been excellent post-Tohoku. So, commissions is another area where clients have improved the terms and conditions of the reinsurance programmes this year,” he explained.
He also noted that personal accident programmes were heavily impacted by COVID-19 losses, but this year Gallagher Re has seen significant and strong demand from the reinsurance industry for these placements.
“They’re diversifying, they attach relatively remotely compared to the underlying exposures, so clients also took the opportunity to restore some of the coverage that had been restricted post COVID. COVID-19 exclusions still exist, but the other infectious disease restrictions have been removed, so that’s an additional improvement that we saw.
“But when we take a step back and look at the broader market, it wasn’t really a renewal that was strongly focused on coverage and structure. It was a renewal where clients sought those rate reductions that reflected significant efforts on the underlying portfolio,” said Sherriff.
He added that cyber remains a highly attractive line of business in Japan, largely consisting of smaller-limit business focused on SMEs. Clients have achieved commission increases, which he said reflects strong appetite for the line alongside very good performance.
Sherriff also provided an overview of the broader Asian market at 1.4, saying: “I wouldn’t say there was so much difference to what I’ve explained, aside from, of course, the nuance around the underwriting, the payback, etc, are quite Japan focused. But if you look at the rest of Asia, what you typically find is the programmes are smaller, so at times, the oversupply of capacity in those markets can feel more pronounced. But I think, again, that the softening trends that we observed in Japan were just as relevant for the rest of Asia, aside from any programmes, of course, that had losses. So, I think you’ll see the risk-adjusted movements in the first few broadly around the same range.”
