(The following statement was released by the rating agency)
HONG KONG/SINGAPORE, March 02 (Fitch) The worst snowfall in
several decades in
central and north-eastern Japan is unlikely to damage the
earnings profile of
rated non-life insurers, says Fitch Ratings. This is because
reported claims are
expected to be only of a magnitude that can be offset by rising
leaving the overall credit profile largely intact.
According to the Nikkei newspaper, the reported damage from the
is estimated at around JPY60bn (USD580m) in claims at the three
groups - Tokio Marine Group, MS&AD Insurance Group and NKSJ
Group. It will take
several months to tally a final claims figure.
If the final snowfall-related losses remain in line with
reported estimates, we
think the financial impact can be absorbed largely by the
ongoing recovery in
earnings across the sector. In the nine months to December 2013,
recurring profit of the three non-life groups rose to JPY564bn -
or as high as
92% of their aggregated full-year estimate of JPY614bn.
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 also remain
supported by the
increasing contribution from overseas business - with every
group registering double-digit increases in revenue from their
Moreover, a yearly reduction in natural disaster losses in the
first nine months
of the financial year to December 2013 also helped the financial
the run-up to the heavy snowfalls.
The outlook for the sector remains sensitive to the risk of
underperformance and a major catastrophe event. Both could weigh
on the capital
buffer. But the available earnings cushion means that we do not
recent snowfall damage to be of a scale that could pose a major
risk to the
credit profile of non-life insurers.
Two weekends of heavy snowfall in mid-February resulted in a
spike in such
incidents as roofs caving in and trapped cars receiving roadside
resulting damage has raised the prospect of tens of thousands of
according to the Nikkei.
Associate Director, Insurance (Asia-Pacific)
2801, Tower Two
+852 2263 9942
Senior Director, Fitch Wire
+65 6796 7232
Additional information is available at www.fitchratings.com.
Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234,
firstname.lastname@example.org; Wai-Lun Wan, Hong Kong, Tel: +852
2263 9935, Email:
The above article originally appeared as a post on the Fitch
Wire credit market
commentary page. The original article can be accessed at
All opinions expressed are those of Fitch Ratings.
Applicable Criteria and Related Research:
2014 Outlook Japan Non-Life Insurance
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS
here. IN ADDITION,
ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS,
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE
AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE
FROM THE 'CODE OF
CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER
SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES.
DETAILS OF THIS
SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH