HONG KONG, June 29 (Bernama-BUSINESS WIRE) -- High common stock leverage among each of Japan’s major non-life insurers brings systematic equity price risk into greater consideration, given the current COVID-19-driven stock market volatility, according to an AM Best special report.
The Best’s Special Report, “Japan Non-Life: Robust Capitalisation to Weather Stock Market Volatility,” states that stock market volatility continues to pose the biggest challenge to the balance sheets of Japan’s major non-life insurers, given the potential losses to the asset valuations that companies may face during global stock market routs.
The report notes that the top four domestic non-life insurers – Aioi Nissay Dowa Insurance, Mitsui Sumitomo Insurance, Sompo Japan Insurance, and Tokio Marine & Nichido Fire Insurance – which have relatively high common stock leverage, reported lower valuations of their stock holdings during first-quarter 2020; this has led to considerable pressure on the fair value of their available for-sale securities and adjusted net assets in absolute terms. The aggregate fair value of the companies’ available-for-sale securities plunged by over JPY 1.0 trillion (USD 9 billion), while aggregate adjusted net assets contracted by more than JPY 1.4 trillion (USD 12 billion) quarter on quarter.
BEST'S MARKET SEGMENT REPORT: STOCK MARKET VOLATILITY PUTS FOCUS ON EQUITY PRICE RISKING JAPAN'S NON-LIFE INSURANCE MARKET
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