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Japanese insurers riding out typhoons

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Typhoons Hagibis and Faxai, which lashed Japan this month and last respectively, are not expected to have a material impact on the capitalisation of the country’s three major insurers, according to AM Best.

The ratings agency estimates the total catastrophe loss impact from the two disasters on MS&AD Insurance Group Holdings, Sompo Japan Nipponkoa Insurance and Tokio Marine & Nichido Fire Insurance will not exceed ¥200 billion ($2 billion).

“Additionally, this estimate is before the release of catastrophe loss reserves. As a result, the net loss is unlikely to place significant negative pressure on the solvency and capitalisation of these groups,” AM Best says.

“In AM Best’s view, the underwriting profit generated by the domestic business of the three mega-insurers this year should be sufficient to cover the expected net losses…although claims from Typhoon Hagibis may result in it exceeding its domestic catastrophe loss budget for the year.

“Nonetheless, AM Best does not expect the three mega groups to report an overall loss for the current fiscal year, barring any further major catastrophe events in the next five months to the fiscal year-end on March 31.”

Japanese insurers are still assessing the final loss bill for Hagibis. Risk modelling firm AIR Worldwide has put Faxai’s insured losses at $US3-7 billion ($4.3-10.2 billion).