Short- term losses offset by increased earnings
The worst snowfall in decades in central and north- eastern Japan, in February 2014, is unlikely to damage the earnings profile of rated non- life insurers, says Fitch Ratings. This is because reported claims are expected to be offset by rising earnings, leaving the overall credit profile intact. According to the Nikkei newspaper, the reported damage from the record snowfall is estimated at around 60 billion Yen ($ 580 million) in claims at the three major nonlife groups, Tokio Marine Group, MS& AD Insurance Group and NKSJ Group. It will take several months to tally a final claims figure. In the nine months to December 2013, consolidated recurring profit of the three nonlife groups rose to JPY564 billion, or as high as 92 per cent of their aggregated full- year estimate of JPY614 billion. Therefore, on an annualised basis, full- year profit targets can still be met across the sector, barring any other adverse developments. The upswing in earnings is underpinned by the auto insurance business which remains a mainstay of premium income. Earnings are also supported by the increasing contribution from overseas business, with every major insurance group registering double- digit increases in revenue from their overseas subsidiaries.