MS&AD cuts equity risk as merger looms

AM Best expects the group’s balance sheet strength to stay at the strongest level.

AM Best expects MS&AD Insurance Group to strengthen its position in Japan and overseas as it continues to reduce equity risk, improve underwriting performance and expand its international operations, whilst maintaining stable credit fundamentals.

AM Best said MS&AD's balance sheet strength is expected to remain at the strongest level, supported by robust risk-adjusted capitalisation and a conservative financial leverage ratio of 14.1% as of 31 March 2026. 

The agency expects the group's accelerated disposal of strategic equity holdings and continued diversification of investments to gradually reduce its exposure to domestic equity market risk in the coming years.

The group is also expected to benefit from stronger profitability across its domestic and overseas businesses. 

AM Best noted that domestic underwriting results improved in fiscal year 2025 due to premium rate increases, lower natural catastrophe losses and better fire insurance performance, despite ongoing claims inflation in motor insurance.

MS&AD's planned merger of MSI and Aioi Nissay Dowa Insurance Company Limited (ADI) (Japan) in April 2027 is expected to reinforce its position in Japan's non-life insurance market by combining the strengths of both insurers. 

Together, MSI and ADI account for about one-third of Japan's non-life insurance market by net premiums written.