The nation’s five major nonlife insurance firms on May 22 released earnings reports for the year that ended March 31, revealing that their combined pretax profits fell 2.2 percent from the previous year.
Only two of the five insurers — Tokio Marine & Fire Insurance Co. and Mitsui Marine & Fire Insurance Co. — logged pretax-profit increases of 14.3 percent and 5.2 percent, respectively. In the previous business year, all five logged declines in pretax profits due to huge write-offs of nonperforming loans and lower profits stemming from the government’s prolonged low-interest policy.
During fiscal 1996, the insurers were still plagued by record-low interest rates and low stock prices, which created an environment where it was difficult to effectively invest their assets. Tokio and Mitsui attributed their rebound to such factors as a reduction in the amount of sour loans they had to write off and fewer losses incurred on securities sales. In contrast, the remaining three insurers were still handling the decline in value of their securities, despite the fact that the five firms all saw their total premium revenue rise from the previous year.
Many officials of nonlife insurance firms attributed the relatively solid growth in premium revenue to such factors as steady sales of fire and auto insurance as consumers rushed to purchase homes and cars before the rise in the consumption tax on April 1. Total post-tax profits for the five insurers in the 1996 business year, meanwhile, grew 10.3 percent, rising for the first time in four years. Only Nippon Fire & Marine Insurance Co. marked a drop in after-tax profits. The five companies also had combined nonperforming loans worth 86.12 billion yen as of the end of March, according to the figures released. Write-offs of bad loans did not do as much damage to the insurers as in the previous year, mainly because liquidation of the seven “jusen” housing lenders had been completed.