International credit rating agency Fitch Ratings believes that Japan’s leading non-life insurance company has the ability to continue to achieve strong underwriting performance.
The agency said strong earnings from overseas operations and improving domestic motor and property insurance market conditions are expected to support results, although profits from the sale of strategic stakes are likely to be reduced during the financial year to March 2027 (FYE27).
Fitch stated that the three largest non-life insurance groups in Japan are MS&AD Insurance Group Holdings, Inc. (operating entity Mitsui Sumitomo Insurance Company, Limited; Insurance Financial Strength (IFS) rating: A+/Stable), Sompo Holdings, Inc. (operating entity Sompo Japan Insurance Inc; IFS rating: AA-/Stable) and Tokio Marine Holdings, Inc. (operating entity Tokio Marine & Nichido Fire Insurance Co., Ltd. (IFS) Rating: AA-/Stable) – Consolidated profit for the fiscal year ending March 2026 (FYE26) exceeded ¥2 trillion. Fitch Ratings said the result was primarily driven by significant gains from the sale of strategic stakes.
Fitch noted that all three groups achieved healthy underwriting performance in their international operations in fiscal 2026. The agency attributed this to continued expansion in U.S. specialty lines, supported by organic growth and M&A, as well as strong underwriting performance in Europe.
Meanwhile, domestic underwriting improved as pricing adjustments in Japan’s auto and property insurance markets and fewer catastrophe-related claims offset higher vehicle repair costs.
The agency said the insurer’s total combined ratio improved to 94% in fiscal 2026 from 99% in the previous fiscal year, reflecting tighter underwriting discipline and a more favorable claims environment.
Fitch also believes that the three major insurance groups are well capitalized and have sufficient financial strength to support future growth. Their economic solvency ratio remained above 200% throughout fiscal 2020, supported by strong core capital and reserve levels.
The introduction of IFRS 17 is expected to improve consistency when comparing Japanese insurers with international peers without materially changing the underlying credit profiles of these groups, the agency added.
Looking ahead, Fitch expects underwriting performance to remain resilient despite lower expected proceeds from strategic equity disposals. As the value of the remaining assets continues to decline, future sales proceeds are also expected to decrease. During fiscal 2026, these disposals generated a total investment profit of ¥2 trillion, accounting for 90% of the insurer’s consolidated ordinary profit of ¥2.2 trillion, compared with 97% in the previous fiscal year. Fitch noted that under IFRS 17 accounting rules, these gains are not included in net profit.
The rating agency expects overseas operations to remain an important source of earnings. Fitch Ratings said continued investment in U.S. specialty insurance through acquisitions and organic expansion should continue to support underwriting profitability, while strong performance in Europe further boosted MS&AD Insurance Group’s results in fiscal 2026.
Fitch also highlighted continued improvements in underwriting quality in the domestic market. Lower natural disaster claims and higher auto and property insurance premiums led to lower combined ratios, helping insurers absorb the financial impact of rising repair costs.
From a capital perspective, Fitch Ratings believes all three groups are well-positioned to support continued expansion. The economic solvency ratio for FY2026 remains comfortably above 200%, with Tokio Marine Holdings reporting a ratio of 268% calculated using a 99.5% confidence level.
On accounting standards, Fitch Ratings said the transition from Japanese GAAP to IFRS 17 will improve transparency and comparability with international insurers, while not having a material impact on the credit fundamentals of the three groups. Sompo Holdings will adopt IFRS 17 from FY2026, while MS&AD Insurance Group Holdings and Tokio Marine Holdings are expected to implement the standard from FY2027.
