Sompo International has posted a net loss of $146 million for the first quarter of the financial year, mainly due to large natural catastrophe losses, lower investment income, and yen appreciation.
The company’s adjusted profit slumped to $49 million in Q1, compared with $82 million over the same period last year.
However, Sompo International is still forecasting overall profit of $377 million for FY2020, which is higher than the $320 million it achieved last year.
Q1 results were impacted by a $28 million decrease in underwriting profit, mainly due to loss ratio deterioration in crop insurance and nat cat losses, as well as a $22 million decrease in investment income, owing to COVID-19 induced market volatility.
Underwriting income totaled just $10 million over the quarter and net investment income was $63 million, but results were pushed into the red by a $232 million loss that mainly stemmed from an increase in unrealized losses on securities.
Sompo International’s combined ratio increased by 0.5 points 95.4% in Q1, as a 2.9 point increase in the loss ratio was offset by a 2.4 point decrease in the expense ratio.
Looking only at primary insurance business, the loss ratio moved from 65% to 69%, with US business moving from 59% in Q1 2019 to 57% in Q1 2020, and crop insurance rising from 83% to 101%.
For reinsurance, meanwhile, the loss ratio rose 2 points to 61%, with catastrophe business increasing from 50% to 59% and specialty business moving from 47% to 52%.
Sompo International increased its net premiums earned for both insurance and reinsurance business in Q1.
Together, net premiums earned increased by $97 million to $940 million for the quarter, with reinsurance premiums increasing 13% to $481 million and insurance premiums growing 10% to $459 million.
For the full financial year, the company is forecasting a total of $4.071 billion net premium earned, made up of $1.927 billion reinsurance premiums and $2.144 insurance premiums.
