Bermuda-based property and casualty re/insurer, Sompo International, increased its profits only marginally during the first half of the 2019 fiscal year, due to the impact of large losses on the business.
The company, which represents part of the overseas operations of Japanese re/insurer Sompo Holdings, posted a profit of US $190 million for the H1 period, compared to $182 million last year.
This was despite growing net premiums written by 12.9%, which came to $2.5 billion, versus $2.2 billion in 2018.
Sompo International recorded underwriting income of $114 million in H1 2019, down $3 million on the previous year, mainly due to the impact of an increase in provision of loss reserve related to natural disasters in previous fiscal years.
However, this was more than compensated for by a $14 million increase in net investment income, which totalled $152 million for the period.
Large losses have prompted Sompo International to revise its forecast profit for the full-year 2019 down from $412 million to $318 million.
The downward revision includes a $93 million reduction in forecast underwriting profit, mainly due to the impact of large losses, as well as an $11 million reduction in investment income.
Additionally, catastrophe segment of Sompo International’s reinsurance business and the Global Risk Solutions segment of its primary business saw their loss ratios move from 21% to 43, and from 76% to 83%, respectively.
The company explained that both changes were due to provision of loss reserve for natural disasters in the last fiscal year.
Sompo International’s result helped contribute to an overall increase in profits at Sompo Holdings, which saw consolidated ordinary profit for H1 FY2019 increase by $330 million to $586 million, and consolidated net income increase by $200 million to $404 million.
The Group similarly revised its full-year business forecasts to reflect large domestic natural disaster losses, with consolidated ordinary profit now forecast at $1.7 billion and consolidated net income at $1.1 billion.
Sompo’s domestic property and casualty (P&C) business incurred a gross loss of $1.3 billion from natural disasters, but recovered $933 million from its reinsurance program.
This recovery left the company with a net incurred loss of approximately $396 million, and a revised full year forecast of $883 million.
Full-year losses are therefore expected to be much lower than the $1.6 billion incurred in 2018, but still significantly higher than the four years prior to this.
Gross natural disaster losses included $1.0 billion impact from Typhoon Faxai, and $157 million from Typhoon Tapah.
The Sompo Japan Nipponkoa business reported an underwriting loss of $193 million for the half year-period, compared with a loss of $537 million in H1 2018.
This underwriting figure consisted of core underwriting profit of $218 million, including natural disaster losses, as well as a $412 million negative impact related to the company catastrophic loss reserve.