KUALA LUMPUR, March 4 -- The outlook of Japan’s life insurance industry is stable, according to AM Best, a United States-based credit rating agency.
AM Best in a statement said the stable outlook was due to insurers’ solid mortality/morbidity profits, a steady investment yield backed by well-diversified bond portfolios and its solid risk-adjusted capital position.
The new Best’s Market Segment Report, titled ‘Market Segment Outlook - Japan Life Insurance’ states that Japan’s life insurance segment grew by 2.9 per cent last year, in terms of total annualised premiums from policies in force.
Overall, life insurers in Japan are likely to continue delivering robust operating results over fiscal-years 2019/20 and 2020/21, driven by solid mortality/morbidity profits despite potential volatility in investment spreads.
AM Best expects mortality/morbidity margins – this segment’s bread and butter – to remain large and relatively stable, which would help support the steady emergence of core profit.
The agency also expects the exposure to re-investment risk of most life insurers to be limited, given the expected maturity of their investment portfolios.
Despite potential challenges, AM Best believes that most of Japan’s life insurers maintain very strong levels of capitalisation and are capable of withstanding adverse market conditions.