Japan insurers to maintain strong solvency under new regime, report says

Fitch Ratings considers J-ICS conservative for Japan.

Japan’s major domestic insurers will maintain sufficiently strong economic solvency ratios under J-ICS, the new economic value-based capital regime, according to a Fitch Ratings report.

Fitch considers J-ICS conservative for Japan due to high mass lapse risk charges that are based on the United Kingdom and European assumptions.

Ahead of its implementation, insurers and foreign-owned subsidiaries increasingly used asset-intensive reinsurance to improve capital efficiency.

J-ICS also introduces holding company Tier 2 senior debt as a new regulatory capital instrument.

Fitch rates this debt in line with operating subsidiary subordinated debt and recognises it as capital in its Prism Global Model.