Fitch Ratings has forecasted a boost in profitability for Mitsui Sumitomo Insurance Company (MSI), attributing the increase to ongoing strategic divestments, which continue to strengthen the company’s financial performance.
According to Fitch, MSI’s return on equity (ROE) increased to 6% on an annualized basis in the first half of the financial year ending March 2025. This marks an improvement over the three-year average of 5% recorded between 2022 and 2024.
By the end of September 2024, the MS&AD Group, MSI’s parent company, had divested approximately $3.05 billion (¥450 billion) in strategic shareholdings. The group plans to sell an additional $18 billion (¥2.7 trillion) in shareholdings by the close of the 2030 financial year.
Fitch also anticipates further improvements in MSI’s underwriting profitability, driven by consistent premium rate increases in the domestic non-life insurance sector.
Internationally, MSI’s profitability has improved as the group has refined its underwriting policies, particularly regarding natural catastrophe risks. This has helped mitigate the financial impact of recent US disasters, including Hurricanes Helene and Milton, as well as the California wildfires.
Looking ahead, Fitch expects a reduction in investment risks for the MS&AD Group as it continues to reduce its exposure to strategic shareholdings. The group’s risky-asset ratio stood at 76% during the first half of the 2025 fiscal year, in line with Fitch’s expectations for its current rating category.
However, the group still faces significant exposure to Japanese sovereign debt, which accounted for 83% of its total capital as of March 2024.
(Note: Exchange rate used is $1.00 = ¥147.58)
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