Life insurers in Japan to see earnings boost in 2025

Insurers are expanding overseas and non-insurance amidst demographic decline.  

Japan’s macroeconomic fundamentals are expected to support the insurance sector, amidst Real GDP projected to grow modestly beyond 2025, S&P Global Ratings said. 

This should benefit earnings, particularly in the life insurance sector. 

Governance and risk management will become increasingly important as insurers expand overseas and into non-insurance businesses amidst Japan’s demographic decline.  

The creditworthiness of Japan’s insurance industry is expected to remain stable in 2025, though uncertainties persist. 

Market volatility, geopolitical risks, and potential shifts in U.S. policy under Donald Trump’s presidency could undermine credit stability.  

New solvency regulations set for March 2026 could reshape the industry, but potential political and economic shifts remain a concern. 

Insurers are expected to strengthen customer relationships, correct industry distortions, and establish appropriate insurance rates, which could help stabilise profitability, especially in the non-life sector. 

The life insurance sector’s profitability is expected to improve slightly in 2025.

Major life insurers, including Nippon Life, Dai-ichi Life, Meiji Yasuda Life, and Sumitomo Life, are seeing increased profit contributions from overseas businesses. 

Japan’s non-life insurance sector is expected to maintain strong earnings, with an average combined ratio of 97% to 99% over the next two to three years, assuming normalised catastrophe losses. 

Slower deterioration in underwriting profitability and increased investment gains from strategic equity sales are expected to bolster earnings for major non-life insurers. 

Strong overseas business is also set to contribute significantly to Tokio Marine Group, MS&AD Insurance Group, and Sompo Holdings Group.