Japan's top insurers see mixed Q1 results amidst NatCat impacts

Jefferies warns to watch for potential natural catastrophes in Q2 2024.

First quarter (Q1 2024) underwriting of three Japanese insurers was tempered by natural catastrophe, whilst overseas profit trended stronger than anticipated, Jefferies Equity Research said.

Sompo Holdings reported a 2% year-on-year (YoY) decline in adjusted profit for the first quarter, achieving 31% of its FY 2024 target.

Domestic Property & Casualty (P&C) insurance saw a significant 48% drop in profit, primarily due to natural catastrophe impacts amounting to $81.60m (¥12b). 

Despite this, the result was slightly better than planned due to minimal nat cat occurrences post-April's hailstorm.

Likewise, MS&AD Insurance Group saw a 74% YoY leap in adjusted profit, reaching 31% of its FY 2024 target. 

Domestic P&C profit grew by 34%, making up 24% of the FY24 target, thanks to higher investment returns despite an increased CoR.

Daiichi Life reported a 75% YoY surge in group adjusted profit, achieving 42% of its FY24 target. 

Domestic life profit rose by 83% YoY, driven by decreased hedging costs and improved asset yields, alongside accelerated equity sales and favourable yen depreciation.

Sompo’s better-than-expected Q1 2024 results and potential buyback in Q2 2024 could drive its stock to catch up. 

Jefferies warns to watch for potential natural catastrophes in Japan in Q2 2024, as authorities have warned of increased risks from the Nankai Trough earthquake following the Miyazaki quake on 8 August. Tokio and MS&AD hold higher nat cat reserves compared to Sompo.

($1.00 = JPY147.48)