Mitsui Sumitomo sees profit rise with strategic divestments: Fitch Ratings

Fitch also anticipates an improvement in underwriting profitability.

Mitsui Sumitomo Insurance Company’s (MSI) profitability will strengthen in the near term, as the divestment of domestic strategic shareholdings continues to boost returns, Fitch Ratings said.

The company’s return on equity rose to 6% on an annualised basis by the first half of the financial year ending March 2025, surpassing the three-year average of 5% from 2022 to 2024. 

By the end of September 2024, MS&AD Group had divested approximately $3.05b (¥450b) in strategic shareholdings and aims to complete the sale of the remaining $18b (¥2.7t) worth by the end of the financial year 2030.  

Fitch also anticipates an improvement in MSI’s underwriting profitability, driven by steady premium rate hikes in the domestic non-life segment. 

Overseas profitability has also improved, as the group tightened its underwriting policy on natural catastrophe risks, minimising the financial impact of recent US catastrophes, including Hurricane Helene, Hurricane Milton, and the California fires.  

Looking ahead, Fitch expects the MS&AD Group's investment risk to decline as it continues to reduce its exposure to strategic shareholdings. 

The group's risky-asset ratio stood at 76% in the first half of the financial year ending March 2025, within Fitch’s guidelines for the current rating category. 

However, the group remains significantly exposed to Japanese sovereign debt, which accounted for 83% of total capital as of March 2024.

($1.00 = ¥147.58)