KUALA LUMPUR, May 23 (Bernama) -- Japan’s non-life insurers are facing pressure to rebuild catastrophe reserves amid rising reinsurance costs that follow a catastrophe loss-heavy year in 2018, according to an AM Best report.
The new Best’s Market Segment Report, ‘Japan Non-Life Insurers Focus on Profitability’, stated that because of the disasters, Japan’s non-life carriers released a sizeable portion of their catastrophe reserves.
The amount of catastrophe reserves released by Japan’s three non-life insurance giants in the third quarter of fiscal-year 2018 (October to December) totalled approximately USD3.07 billion, according to a statement. (1USD = RM 4.19)
These reserves represented a 13 per cent net reduction of the insurers’ overall catastrophe reserve balance. The vast majority of these reserve releases came from the fire and allied line, and as a result, catastrophe reserves for this line declined by nearly 40 per cent.
The report also stated that some insurers’ lower wind/flood catastrophe excess-of-loss layers were exhausted after typhoons Jebi and Trami in 2018. Insurers needed to pay the reinstatement premium for restoring the layer limit after the first loss event.
Some also needed to purchase back-up reinsurance cover after Typhoon Trami to reinforce their lower-layer protection and cover any additional losses from potential winter snowstorms.
AM Best views the capitalisation of Japan’s major non-life insurers as robust and resilient to underwriting or economic challenges. It expects Japan’s domestic insurance companies to remain focused on operating profitability over the medium term.
AM Best is a global rating agency and information provider with unique focus on the insurance industry. For more information, visit www.ambest.com.
-- BERNAMA
-- BERNAMA
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