Strong in-force business back 'resilient' Japanese life insurers

Pandemic-induced mortality losses will remain small.

Japanese life insurers’ operating performance are likely to remain strong despite the pandemic, with overall underwriting profits backed by stable in-force business and modest health sector growth, according to a Fitch Ratings report.

Pandemic-induced mortality losses will remain small, considering the number of deaths relative to population size in Japan, the report said.

Other relevant net insured losses in popular medical insurance products would be immaterial as claim payments for hospitalisation costs will be minimal due to the structure of typical medical insurance products in the country.

On the other hand, new business may continue to be limited in FYE22 owing to lower face-to-face meetings due to social distancing measures.

The sector’s capital adequacy will be sufficient for their ratings for some time, supported by accumulated capitalisation, including continued hybrid-debt issuance. In addition, most life insurers will attempt to reduce interest-rate risk in order to cope with the new regulatory regime, which will be introduced in Japan from around 2025, the report concluded.