KUALA LUMPUR, Oct 6 (Bernama) -- Global credit rating agency, AM Best is maintaining its stable market segment outlook on the Japan non-life insurance segment given recent profitable underwriting performance and the likelihood carriers will maintain positive results in the face of expected economic headwinds.
In a new Best’s Market Segment Report, “Market Segment Outlook: Japan Non-Life Insurance,” AM Best notes that Japan’s economic recovery continued in fiscal year 2021, although certain business segments still faced pressures.
Over the next 12 months, it remains to be seen how the unfolding situation in Ukraine; elevated commodity prices; the possibility of economic slowdown in several of Japan’s trading partners; and, the development of the COVID-19 pandemic at home and abroad will impact the country’s economy.
“Given the underwriting risk profile of most domestic non-life insurers–which is skewed toward voluntary automobile and fire insurance–AM Best considers the earnings base of Japan’s non-life insurance companies to be sustainable,” said associate director, analytics, AM Best, Jason Shum.
According to a statement, over the near term, despite expectations of strong underwriting profitability, AM Best is of the view that underwriting results for most major domestic non-life insurers will retreat moderately for fiscal year 2022.
While AM Best expects premium revenue to increase, mainly driven by fire, personal accident and other specialty insurance, it is probable that underlying underwriting profit will contract from a higher loss ratio for voluntary automobile insurance.
Given the increase in catastrophe occurrences in recent years, most major non-life companies in Japan recognise the need to raise the profitability and sustainability of their fire insurance products.
Non-life insurance companies in Japan continue to contend with investment challenges amid the volatile domestic and global capital markets. However, the majority of domestic non-life companies have very strong capital positions.
More details at www.ambest.com.
-- BERNAMA
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