Premium income at the nation’s five major nonlife insurance firms fell 4.1 percent in fiscal 1998 from the previous year due to premium rate cuts and sluggish sales amid the recession, according to earnings reports released Thursday.
All five firms logged a decline in premium income, which totaled 3.76 trillion yen. The firms cited the lackluster economy and recent cuts in auto insurance premiums as factors that pushed down revenue.
Many firms have moved to slash their auto insurance premiums since rate liberalization last July. Deregulation has also opened doors to foreign insurers and new entrants from nonfinancial sectors such as Sony Corp. and H.I.S. Co., further heating up competition.
On a pretax basis, Tokio Marine & Fire Insurance Co., the nation’s biggest nonlife insurer, logged a 40.8 percent increase in profits to 133.95 billion yen during the year to March 31. Tokio Marine officials attributed the increase to profits gained through its trading of stock index futures.
Runnerup Yasuda Fire & Marine Insurance Co., meanwhile, suffered a 47.2 percent decline in its pretax profits to 30.88 billion yen.
Combined pretax profits at the five nonlife insurers came to 264.68 billion yen, up 3.8 percent from the year before, helped by the surge in Tokio Marine’s profit.
Many firms reported an increase in insurance payments during fiscal 1998 due to a series of natural disasters including typhoons. Meanwhile, the amount of loans placed under risk management came to 219.77 billion yen for fiscal 1998, down from 242.87 billion yen the previous year.
The figure includes loans to bankrupt borrowers, loans in arrears for at least three months and restructured loans.
Japan’s nonlife insurers are in relatively good health compared to the nation’s life insurance firms, many of which are suffering from massive negative returns on their investment portfolios.
The solvency margin — a measurement of insurance firms’ financial health, which can be compared to the capital-adequacy ratio of banks — rose at all five firms, helped in part by changes in risk measurement rules.
The margin was well over the regulatory threshold of 200 percent for the five: 2,390.7 percent for Tokio Marine; 1,427.6 percent for Yasuda; 1,485 percent for Mitsui Marine & Fire Insurance Co.; 1,605.8 percent for Sumitomo Marine & Fire Insurance Co.; and 1,451.8 percent for Nippon Fire & Marine Insurance Co.