Rate hikes likely to boost Tokio Marine & Nichido Fire’s domestic non-life growth

The insurer has maintained a solid return on equity of 7.4% from 2019 to 2023.

Whilst Tokio Marine & Nichido Fire Insurance (TMNF) has significant exposure to domestic equity risks, its strong capital base is expected to absorb these risks. AM Best also highlighted TMNF’s plans to reduce equity exposure by accelerating the sale of strategic equity holdings.

TMNF has shown consistent premium growth, with net premium written (NPW) rising from $23.80b (¥3.4t) to $32.20b (¥4.6t) between fiscal years 2019 and 2023. The company has maintained a solid return on equity of 7.4% over the same period.

Despite occasional volatility due to natural catastrophes, TMNF's underwriting performance in Japan’s non-life sector has been consistently profitable. Future growth in its domestic non-life business is expected to benefit from ongoing rate hikes.

Internationally, TMNF has seen significant improvements, particularly in North America, where its operations achieved double-digit profit growth in fiscal 2023.

This growth is driven by proactive underwriting and favourable premium rates, said AM Best. TMNF's international business now represents about 47% of its NPW, and its diversified portfolio provides a strategic advantage in navigating market challenges.

The company also maintains a strong enterprise risk management (ERM) framework, which aligns with its complex risk exposures.

AM Best expects that TMNF’s strong market position in Japan, coupled with its international diversification, will continue to support its long-term earnings and stability.

($1.00 = ¥143.19)