Japan’s major general insurers are projected to report improved earnings after profitability took a hit from a few mid-sized natural catastrophes and covid-related claims, Fitch Ratings says.

The catastrophes that caused the insurers higher weather-related losses included a hail event in June last year and typhoons months later in September.

“We expect the Japanese non-life insurers’ profitability to improve moderately as the impact of Covid-19 will ease substantially,” Fitch says, referring to the fiscal year ending March 2024.

Underwriting profitability is also expected to recover to pre-pandemic levels, Fitch said.

Fitch says the insurers’ capitalisation remains strong and it is maintaining the sector outlook at neutral at neutral on the assumption that catastrophe losses will remain within insurers’ expectations.

“This is based on our view that key credit metrics will remain resilient, with rating expectations over the next 12-24 months based on revised assumptions regarding global financial-market stresses, such as US regional banking sector issues and their direct and indirect impact on Japanese non-life insurers’ credit quality.”