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MS&AD Revises Profit Projection Downward for 2017 Fiscal Year on Catastrophe Loss

TOKYO, Dec 04, 2017, (A. M. Best via COMTEX) --

MS&AD Insurance Group Holdings Inc. has revised downward its net income projection to ¥145 billion from the original ¥245 billion for the 2017 fiscal year ending March 31, 2018, according to the Japanese group’s financial presentation.

The group’s overseas subsidiaries are expected to record a loss of ¥41 billion, worsened from the initial net income projection of ¥45 billion, for the 2017 fiscal year. The five major overseas natural catastrophes, including hurricanes Harvey, Irma and Maria, Mexico earthquake and California wildfire are forecast to cause incurred losses of ¥105 billion for the year, MS&AD said.

Incurred losses from hurricanes in North America and Mexico earthquake have increased by ¥79.5 billion from the initial forecast. “The impact on net income will be ¥67 billion, and this is the main reason why we have lowered our net income forecast on this occasion,” MS&AD said.

Domestic natural catastrophes also led to an increase in incurred loss projections to ¥67 billion for the 2017 fiscal year. MS&AD said it factored in incurred losses, ¥36 billion, due to Typhoon No. 21 in October. There is an increase of ¥17 billion from the initial forecasts. However, this will be covered to a certain extent by reversal of the catastrophe reserve. MS&AD said the impact on net income will be “approximately ¥9 billion.”

For subsidiary Mitsui Sumitomo Insurance, MS&AD said: “Full-year underwriting profit is roughly in line with our initial forecast partly due to positive impact related to catastrophe reserves.” But natural catastrophes have increased incurred losses. Overall, MS&AD said “an increase in gains on sales of stocks, which reflects the buoyant stock market, has contributed greatly to the upward revision to our profit forecast.” Mitsui Sumitomo Insurance’s net income projection increased to ¥172 billion from the original ¥166 billion for the 2017 full fiscal year.

In the first half of 2017 fiscal year, MS&AD reported a 23% drop in net income to ¥75.7 billion on a consolidated basis. Overseas subsidiaries posted a loss of ¥38.1 billion in the first half, compared with net income of ¥13 billion a year ago.

Hurricanes in North America and Mexico earthquakes brought total incurred losses of ¥87.4 billion in the first half of 2017 fiscal year. MS Amlin reported the largest incurred losses of ¥57.2 billion, according to MS&AD. Aioi Nissay Dowa’s inward reinsurance from overseas posted incurred losses of ¥28.6 billion.

The group’s investment profit and others rose 32.4% to ¥106.6 billion on a consolidated basis in the first half, according to MS&AD.

Aioi Nissay Dowa Insurance Co. Ltd. and Mitsui Sumitomo Insurance Co. Ltd. both currently have the Best’s Financial Strength Ratings of A+ (Superior).

(By Iris Lai, Hong Kong bureau manager: Iris.Lai@ambest.com)

Iris Lai

Copyright (C) 2017 by A. M. Best Company, Inc.

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