Tokio Marine ROE seen at 16% by 2030: Morningstar

Net earned premiums are projected to expand about 5%.

Tokio Marine’s long-term outlook remains unchanged, but its loss expense ratio is projected to stay around 65%, with net earned premiums growing about 5% by fiscal 2030, according to Morningstar.

Return on equity is expected to ease to roughly 16% by fiscal 2030 from about 18% forecast for fiscal 2026, mainly due to lower gains from equity sales.

The insurer recently lifted full-year profit guidance by $0.8b (¥120b) to $8.0b (¥1.23t) after December-quarter adjusted net income reached 89% of the full-year target.

The upgrade was mainly supported by equity-sale gains, lower catastrophe losses, and reduced capital losses in North America.

Performance across both domestic and international businesses was broadly in line with expectations.

International adjusted net income improved on yen depreciation and fewer capital losses, but softer conditions in overseas insurance markets are likely to pressure margins ahead.

In Japan, lower catastrophe losses supported earnings, although deteriorating loss ratios in auto, fire, and specialty lines signal headwinds. Catastrophe losses are also expected to normalise and cost inflation to rise, partly offsetting steady rate increases.

Valuation remains elevated. At a recent share price of $40.9 (¥6,297), the stock trades at about 2.4 times price-to-book, above the roughly 2 times implied by fair value and higher than the 1.3–1.6 times range for major peers.

The premium reflects above-peer profitability. The fair value estimate is unchanged at $35.8 (¥5,500).

($1.00 = ¥154.90)