Best’s Commentary: Typhoons Faxai, Hagibis, Not Likely To Materially Impact Japanese Non-Life Insurers’ Capitalization

HONG KONG--(BUSINESS WIRE)-- The recent mega-typhoons in Japan are unlikely to affect the financial stability of the country’s three major non-life insurers due to their appropriate catastrophe risk management and strong capitalization levels, according to a new AM Best commentary.

In a new Best’s Commentary, titled, “Typhoons Faxai and Hagibis Unlikely to Impact Japanese Insurers’ Capitalization,” AM Best states that net of reinsurance, the total catastrophe loss impact of Typhoon Faxai on the three mega insurance groups —MS&AD Insurance Groups Holdings, Inc. (MS&AD), Sompo Japan Nipponkoa Insurance Inc. (SJNK) and Tokio Marine & Nichido Fire Insurance Co., Ltd.’s (TMNF) — is unlikely to exceed JPY 200 billion. Additionally, this estimate is before the release of catastrophe loss reserves. As a result, the net loss is unlikely to place significant negative pressure on the solvency and capitalization of these groups.

Preliminary claim figures for Typhoon Hagibis are unavailable as it typically takes up to two weeks for the local insurers to publish their estimates.

AM Best believes that the losses from Typhoon Hagibis will be largely driven by flood impact, rather than wind damage. Given the record breaking level of rainfall in some areas, as well as the relatively high population density surrounding Greater Tokyo, AM Best expects that the three mega-insurance groups’ gross losses from Typhoon Hagibis will be as significant as that from Typhoon Faxai, albeit possibly less severe than Typhoon Jebi in 2018.

In AM Best’s view, the underwriting profit generated by the domestic business of the three mega-insurers this year should be sufficient to cover the expected net losses from Typhoons Faxai and Hagibis, although claims from Typhoon Hagibis may result in it exceeding its domestic catastrophe loss budget for the year. Nonetheless, AM Best does not expect the three mega groups to report an overall loss for the current fiscal year, barring any further major catastrophe events in the next five months to the fiscal year-end on March 31.

AM Best will continue to monitor the financial impact of Typhoons Faxai and Hagibis on its rated entities and will provide updates on ratings as necessary.

To access the full copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=290940.

AM Best is a global credit rating agency and information provider with an exclusive focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2019 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Jason Shum

Associate Director, Analytics

+852 2827 3424

jason.shum@ambest.com



Christie Lee

Senior Director, Analytics

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Christopher Sharkey

Manager, Public Relations

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Jim Peavy

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Source: AM Best