Japan’s life insurers are poised for a boost in earnings in 2025, driven by stable macroeconomic conditions and strategic expansions abroad, according to S&P Global Ratings.
While Japan’s real GDP is forecasted to grow modestly beyond 2025, the insurance sector, particularly life insurance, stands to benefit from this economic stability. However, the industry’s future growth will rely on insurers navigating Japan’s demographic challenges by diversifying into international markets and non-insurance sectors.
As insurers expand their reach, the importance of robust governance and risk management will increase. With Japan’s aging population and shrinking domestic market, this strategy is seen as essential for maintaining profitability and growth.
Although the creditworthiness of Japan’s insurance industry remains stable, uncertainties persist. Factors such as market volatility, geopolitical risks, and potential shifts in U.S. policy under former President Donald Trump’s administration could threaten the stability of the sector.
Furthermore, new solvency regulations set for implementation in March 2026 could have a significant impact on the industry, adding another layer of complexity as insurers face potential political and economic disruptions.
To safeguard profitability, insurers are expected to enhance customer relationships, address market distortions, and adjust pricing models. These efforts are anticipated to stabilize the non-life insurance sector, which has faced challenges in recent years.
In the life insurance sector, major players such as Nippon Life, Dai-ichi Life, Meiji Yasuda Life, and Sumitomo Life are seeing increased contributions to their profits from their overseas operations. This trend is expected to continue as insurers leverage international growth to bolster their earnings.
Japan’s non-life insurance sector is also expected to perform strongly, with an average combined ratio of 97% to 99% projected over the next two to three years, assuming normal catastrophe losses. Improvements in underwriting profitability, coupled with increased investment returns from strategic equity sales, should further enhance earnings for key non-life insurers.
Notably, major non-life insurance groups like Tokio Marine, MS&AD Insurance, and Sompo Holdings are set to benefit significantly from their growing overseas businesses, positioning them well for sustained financial performance.
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