Japanese non-life recovery

Asia

According to rating agency Fitch, the financial performance of major Japanese non-life insurers continues to improve. Fitch said that the disclosed information on premium income, insurance claims, and gains on investment portfolios, points to a positive turnaround in the sector. Fitch also expects the capital positions of these companies to remain strong in this fiscal year. Referring to Japanese non-life insurers’ recently released third quarter results (the Japanese fiscal year runs from April to March), Fitch referred to the marginal but nevertheless significant increase in non-life insurers’ net written premium for voluntary motor business of 0.3%. Japanese non-life insurers had endured three consecutive years of decline in motor insurance net written premium income in 2003 due to stiff price competition in the market. The net premium income of the five biggest non-life companies in Japan increased in other lines as well, except for compulsory motor liability business. In particular, there was a demand for earthquake coverage, an increased need for medical and nursing care products as well as general liability insurance products. The demand for insurance cover was prompted by a surge in trading activities in Asia, and the improving economic outlook for Japan, Fitch noted.