Unlikely mega typhoons affect Japan's major insurance group capitalisation

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KUALA LUMPUR (Oct 18): The recent mega typhoons in Japan are unlikely to affect the financial stability of the country’s three major non-life insurers due to appropriate catastrophe risk management and strong capitalisation levels.

This is according to a new AM Best 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 MS&AD Insurance Groups Holdings Inc, Sompo Japan Nipponkoa Insurance Inc and Tokio Marine & Nichido Fire Insurance Co Ltd is unlikely to exceed JPY 200 billion. (JPY 100 = RM3.86)

AM Best believes that the losses from Typhoon Hagibis will be largely driven by flood impact, rather than wind damage.

The global rating agency expects the three mega insurance groups’ gross losses from Typhoon Hagibis to be as significant as that from Typhoon Faxai, albeit possibly less severe than Typhoon Jebi last year.

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.

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