Best’s Market Segment Report: AM Best Assigns Stable Outlook to Japan’s Life Insurance Industry

HONG KONG--()--AM Best has assigned a stable outlook to Japan’s life insurance industry, owing to insurers’ solid mortality/morbidity profits, a steady investment yield backed by well-diversified bond portfolios and its solid risk-adjusted capital position.

The new Best’s Market Segment Report, titled, “Market Segment Outlook - Japan Life Insurance,” states that Japan’s life insurance segment grew by 2.9% in 2019 in terms of total annualized premiums from policies in force. Core profit continued to increase, to JPY 3.78 trillion (approximately USD 35 billion) in fiscal-year 2018/19 from JPY 3.58 trillion in fiscal-year 2017/18. The Japan life market, which is dominated by six major insurance companies, recorded an improvement in total core profit to JPY 2.81 trillion from JPY 2.66 trillion during fiscal-year 2018/19. Overall, life insurers in Japan are likely to continue delivering robust operating results over fiscal-years 2019/20 and 2020/21, driven by solid mortality/morbidity profits despite potential volatility in investment spreads.

AM Best expects mortality/morbidity margins – this segment’s bread and butter – to remain large and relatively stable, which would help support the steady emergence of core profit. AM Best also expects the exposure to re-investment risk of most life insurers to be limited, given the expected maturity of their investment portfolios.

While the impact of some of the geopolitical headwinds in 2019, most notably Brexit and U.S.-China relations, appear to be easing, new threats, such as the recent novel coronavirus outbreak, are likely to hurt global economic growth, and may increase the potential for volatility in global capital markets. This may not only push yields lower globally in 2020, but will make the hunt for yield even more challenging.

Despite these potential challenges, AM Best believes that most of Japan’s life insurers’ maintain very strong levels of capitalization, and are capable of withstanding adverse market conditions, such as in the event of a severe stock market decline or significant fluctuations in foreign exchange rates.

To access a copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=294865.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

Jason Shum
Associate Financial Analyst
+852 2827 3424
jason.shum@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

Contacts

Jason Shum
Associate Financial Analyst
+852 2827 3424
jason.shum@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com