Tokio Marine’s China unit outlook stable despite rising claims pressure

Competition in the non-life market continues to weigh on profitability levels.

AM Best has kept a stable outlook on The Tokio Marine and Nichido Fire Insurance Company (China) Limited, pointing to expectations that the insurer will maintain its capital strength and steady operating profile despite market pressures.

TMNCH’s balance sheet is expected to stay a key support for the ratings. Its risk-adjusted capitalisation, measured by Best’s Capital Adequacy Ratio, remains at the strongest level. 

The company also maintains low underwriting leverage, limited reliance on reinsurance, and a prudent investment approach.

Although its capital base is relatively modest, AM Best expects solvency to remain comfortably above regulatory requirements.

On performance, AM Best noted that results may remain under pressure in the near term. 

The company’s underwriting performance and profitability weakened in 2025, with return on equity falling to the mid-single-digit range and the combined ratio rising due to higher claims. 

Competition in China’s non-life insurance market and reduced risk exposure are expected to continue weighing on margins.

Even so, the insurer is expected to maintain overall stable earnings, supported by consistent investment income, particularly from bank deposits. 

Over the medium term, TMNCH is likely to focus on selective growth, targeting upstream and downstream business linked to Japanese corporate clients.

Premium growth is not expected to recover quickly. The company’s gross written premiums declined for a fourth consecutive year to $132.1m (RMB903m) in 2025, reflecting reduced activity from Japanese firms operating in China and TMNCH’s cautious underwriting approach. 

Going forward, the insurer is expected to prioritise portfolio quality over volume, with a focus on retaining Japanese clients and their supply chain partners, whilst gradually expanding through broker channels for higher-quality risks.