HONG KONG--(BUSINESS WIRE)--AM Best is maintaining its stable market segment outlook on Japan�s non-life insurance segment, citing sustained profitable underwriting performance and carriers� ability to weather market volatility and maintain solid risk-adjusted capital levels.

A new Best�s Market Segment Report, titled, �Market Segment Outlook: Japan Non-Life Insurance,� states that despite large-scale catastrophe losses in 2019, profitable performance in most other classes of business, particularly voluntary automobile insurance, non-life insurance companies in Japan still generated an overall underwriting profit. Although the COVID-19 pandemic has led to a slowdown in economic activity domestically and regionally, AM Best is of the view that COVID-19 is unlikely to have a significant impact on the underwriting performance of Japan�s non-life companies over the short to medium term. Claims directly related to COVID-19 are expected to be manageable, given that domestic non-life insurers generally have limited net exposure to event cancellation and business interruption risks in Japan.

�The three largest domestic non-life insurance groups have indicated that most of their claim payments related to event cancellation and business interruption mostly emanated from their overseas insurance business, and so any impact from COVID-19 on domestic non-life business has been relatively limited,� said Jason Shum, AM Best associate director, analytics.

According to the report, any direct negative effect on underwriting profit likely will be mitigated by the decline in claims frequency for voluntary automobile insurance, especially during the period that Japan declared a state of emergency. In addition, most non-life companies have actively taken pre-emptive steps to offset potential effects of the pandemic, primarily through accelerating the pace of digital transformations and business reforms to raise productivity and efficiency.

The increasing frequency of large-scale natural catastrophes and the resultant increase in reinsurance cost, along with uncertainty in domestic and global capital markets, are also factors that could place pressure on Japan�s non-life insurers. However, AM Best notes that most major market participants have sought to develop a better perception of their exposure to climate risk, as well as raise premiums on fire, flood, and wind damage covers; exercise prudence and control their catastrophe risk retentions; and secure sufficient capital to maintain financial soundness.

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=302637.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising 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 Director, Analytics
+852 2827 3424
[email protected]

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
[email protected]

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644
[email protected]