2023
Annual Report
Introduction to Earthquake Reinsurance in Japan

Management philosophy
JER will aim to be a respected company that contributes to the sustainable developmentof a prosperous and safe society through the appropriate management of the earthquake
insurance system.

Management policy
Based on our initiative and spirit of challenge,
We will establish a fair and highly transparent management system.
We will also respond promptly and decisively to changes in the social environment.

We will prepare the reinsurance payment system to enable prompt and proper actions
after a large earthquake.

We focus on liquidity and safety in asset management.

CORPORATE DATA (as of March 31, 2023)
Established:

May 30, 1966

Capital:1 billion yen

Total assets:

661.0 billion yen

Address:

Hulic Kobuna-cho Building,
8-1, Nihonbashi-kobuna-cho,
Chuo-ku, Tokyo Japan 103-0024

E-mail:jer-contact@nihonjishin.co.jp

URL:

https://www.nihonjishin.co.jp/

Contents

1

Message from the President

2Japan Earthquake Reinsurance Co., Ltd.

5

Financial Highlights

8Earthquake Insurance in Japan

16

Reinsurance of Earthquake Insurance

20

Statistics

23

Sustainability

28

Financial Section

36

Corporate Data

MESSAGE FROM
THE PRESIDENT

Chairman:Kazuhiko Ishihara

President:

Shoji Ito

I would like to express my sincerest gratitude to all our stakeholders for their continued support.
We also wish to extend our deepest sympathies to all the people affected by the earthquake off the coastof the Noto region of Ishikawa prefecture in May this year and other earthquakes.
Japan Earthquake Reinsurance Co., Ltd. (“JER”) has been committed to continuing key operations suchas reinsurance payouts despite the COVID crisis, with a range of measures to help prevent the spread of
COVID-19 such as staggered commuting, teleworking and online meetings.
Since the establishment of the earthquake reinsurance scheme in 1966, JER, the only reinsurancecompany in Japan specializing in household earthquake insurance, has adopted "JER will aim to be arespected company that contributes to the sustainable development of a prosperous and safe society
through the appropriate management of the earthquake insurance system" as its management philosophy
and has worked to realize this philosophy.
JER has sought to make prompt and reliable reinsurance payouts, its key mission, in the aftermath ofdisasters such as the Great Hanshin-Awaji Earthquake in 1995, the Great East Japan Earthquake in 2011,
the Kumamoto earthquakes in 2016, and the 2021 and 2022 earthquakes near Tohoku.
Given that earthquake insurance plays an important part in supporting the lives of the people affectedby such disasters, the earthquake reinsurance scheme was developed through collaboration between theJapanese government, private non-life insurance companies and JER. Through the joint efforts of boththe public and private sectors, the scheme is run in such a way that it facilitates prompt and reliable
earthquake insurance payouts.
It is believed that major earthquakes, such as a Nankai Trough earthquake or an inland Tokyo earthquake,
will definitely occur in the near future. It is necessary to anticipate the simultaneous occurrence ofmeteorological disasters, which are increasing in severity and frequency, pandemics and cyber attacks.
To fulfill our responsibilities as a reinsurance company specializing in earthquake insurance, JER isdeveloping a system to pay insurance proceeds promptly in case of contingencies. JER believes it is also
important to undertake initiatives to solve social issues, such as enhancing disaster prevention capabilities
to minimize damage to society when disasters do occur and strengthening society's resilience so that it
can quickly overcome and recover from disasters.
In light of the changes described above, JER formulated its medium- to long-term corporate vision, "Moving
into the next stage of security with the strength of an earthquake insurance specialist," and started to
implement the 6th Medium-Term Management Plan in FY2021. Specifically, building on its sophisticatedmanagement (ERM) and the promotion of SDGs management, JER is pursuing a human asset strategy anddigital transformation (DX). It is focusing on the following four strategies: promoting initiatives toward theevolution of the earthquake insurance system, establishing an asset management system with an eye toan asset size of 1 trillion yen, establishing a system for prompt payouts at the time of a complex disasterand improving the percentage of earthquake insurance as an accessory contract to fire insurance, as wellas raising awareness of disaster preparedness and mitigation.
Fully recognizing our social responsibilities and mission, we will continue contributing to the "developmentof the earthquake insurance system" and the "realization of a safe and secure society" through theearthquake reinsurance business, aiming to earn greater trust from our stakeholders.
As such, we sincerely appreciate your continued support.
July 2023

Shoji Ito, President
Japan Earthquake Reinsurance Co., Ltd.

1

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

JAPAN EARTHQUAKEREINSURANCE CO., LTD.

PROFILEIn accordance with the introduction of the Law concerning Earthquake Insurance (Law No. 73,
May 18, 1966) and following the launch of sales of earthquake insurance on dwelling risks to
be written in conjunction with dwelling and shop-owners comprehensive insurance policies,
JER was established with share capital of 1 billion yen by 20 domestic Japanese non-life insurance companies on May 30, 1966. The Company was licensed for the earthquake insurance
business and started its operation on June 1, 1966.
Earthquake insurance on dwelling risks depends on this reinsurance system (which is a safety
net, as it were), in which the government, non-life insurance companies and JER participate toensure that insurance claims can be paid to policyholders without fail.
The insurance premiums paid by policyholders are separated from non-life insurance companies, and are managed and operated by the government and JER.
JER is thus at the center of a reinsurance system, and undertakes reinsurance procedures withthe government and non-life insurance companies, while managing and operating the insurance premiums paid by policyholders as the sole earthquake reinsurance company in Japan.

ORGANIZATION(As of April 1, 2023)
General meeting of shareholders
Board of auditors
Board of directors

Board of managing directors

Reinsurance
administration dept.

Financial dept.

Planning andcontroller dept.

Audit office

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

2

SHAREHOLDERS(As of March 31, 2023)
No. of shares owned(1,000 shares)

Percentage of shares
owned (%)

Tokio Marine & Nichido Fire Insurance Co., Ltd.

537

26.9

Sompo Japan Insurance Inc.

529

26.5

Mitsui Sumitomo Insurance Co., Ltd.

338

16.9

Aioi Nissay Dowa Insurance Co., Ltd.

255

12.8

AIG General Insurance Company, Ltd.

123

6.2

The Toa Reinsurance Co., Ltd.

93

4.7

Nisshin Fire & Marine Insurance Co., Ltd.

61

3.1

The Kyoei Fire & Marine Insurance Co., Ltd.

34

1.7

Rakuten General Insurance Co., Ltd.

8

0.4

SECOM General Insurance Co., Ltd.

7

0.4

Shareholder

BOARD MEMBERS (FULL-TIME)(As of July 1, 2023)

3

Post

Name

Chairman (representative director)

Kazuhiko Ishihara

President (representative director)

Shoji ItoManaging director (representative director)

Hiroyuki Hata

Managing director (representative director)

Satoshi Takayama

Corporate auditor

Tsuyoshi Suzuki

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

MANAGEMENT INFORMATIONJER is now in the last year of the 6th 3-year Medium-Term Management Plan launched in
2021.
In addition to announcing its plan, JER adopted its medium- to long-term corporate vision,“Moving into the next stage of security with the strength of an earthquake insurance specialist.” This plan lays out its first steps toward even more rapid progress over the next three years
or so to achieve its vision.
[Medium- to long-term corporate vision]“Moving into the next stage of security with thestrength of an earthquake insurance specialist.”
Under the 6th Medium-Term Management Plan, JER aims to build on its sophisticated management and contribute to the promotion of SDGs management by pursuing a human assets
strategy and digital transformation (DX). Specifically, it will focus on the following four strategies:(i) Promote initiatives toward an evolution of the earthquake insurance system (the earthquake insurance system)(ii) Establish an asset management system with an eye to an asset size of 1 trillion yen (theasset management system)(iii) Establish a system for prompt payouts at the time of a complex disaster (the emergency
response system)(iv) Pursue initiatives in collaboration with relevant industries and others toward improving thepercentage of earthquake insurance as an accessory contract to fire insurance, as well as
support for disaster preparedness and mitigation (the system for preparing for disasters)

The 6th Medium-Term Management Plan (outline) [2021-2023]
Management
philosophy

Management policy

Medium- to Long-Term
Corporate Vision

JER will aim to be a respected company that contributes to the sustainable development of a prosperous and safe society through the appropriate management of the earthquake insurance system.

We will prepare the reinsurance payment system to enable prompt
and proper actions after a large earthquake.

We will establish a fair and highly transparent management system.
We will also respond promptly and decisively to changes in the social
environment.

“Moving into the next stage of security with the strength of an earthquake insurance specialist.”

The earthquake insurance
system

New
Medium-Term
Management
Plan

We focus on liquidity and safety in asset management.

新management
中 The assetsystem
期
経営
計 People and systems
画Base

Promoting initiatives toward the evolution of
the earthquake insurance system

Establishing a system for prompt payoutsat the time of a complex disaster

The emergency
response system

Establishing an asset management systemwith an eye to an asset size of 1 trillion yen

Initiatives in collaborating with relevant industries andothers to improve the percentage of earthquake insurance
as an accessory contract to fire insurance, as well as
support for disaster preparedness and mitigation

The system for
preparing for disasters

Human assets strategy

Promotion of digital transformation

Sophistication of management foundations andto the promotion of SDGs management

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

4

FINANCIAL HIGHLIGHTS

Premiums Written
348 bnPremiums written = Gross premiums written –Cancellation refunds, other refunds(Yen in billions)
360

320

348
328

329

2020

2021

311

Underwriting Profit,
Ordinary Profit,
Net Income
No underwriting profit was written.
All underwriting profits and investment income
generated shall be set aside in an underwriting
reserve for future major earthquakes in accordance with the Law on Earthquake Insurance.

283
280

240

0

≈
2018

2019

2022 (Fiscal year)

Net Premiums Written

Net Loss Ratio

268 bn85.0%

Net premiums written = Premiums written –Reinsurance premiums ceded(Yen in billions)

Net loss ratio = (Net claims paid + Lossadjustment expenses) ÷ Net premiums written
(%)
120

300
252
250

268

113.0%

232

85.0%

90
200
150

64.7%

118

60

129

100

30

24.4%

50
0

0
2018

2019

2020

2021

2022 (Fiscal year)

5.4%
2018

2019

2020

2021

2022 (Fiscal year)

Net Claims Paid

Net Expense Ratio

207 bn22.0%(Yen in billions)
240

(%)
50

Net claims paid = Claims paid –Reinsurance claims recovered

Net expense ratio = Underwriting expenses ÷
Net premiums written

207
200

45.3%

43.3%

40
150

160

30

124
120

22.4%

22.0%

2021

2022 (Fiscal year)

25.2%

20
80
40

10

26
10

0

5

0
2018

2019

2020

2021

2022 (Fiscal year)

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

2018

2019

2020

Combined Ratio

Total Assets, Net Assets

107.0%Net assets
Total assets
Net assets (Yen in billions)4

Total assets(Yen in billions)
800

Combined ratio = Net loss ratio + Net expense
ratio

689

667

(%)

661

600

200

3
510

468

158.3%

400

150

2
1.5

1.5

1.5

1.5

1.5

107.0%
200

100
67.7%

1

87.1%

0

50

2018

2019

2021

2020

0
2022 (Fiscal year)

30.6%
0

Breakdown of total assets
2018

2019

2020

2021

2022 (Fiscal year)

19 bn

Non-consolidated
Solvency Margin Ratio

Breakdown of securities
1 bn
12 bn
33 bn

150 bn38 bn
0 bn

452 bn82bn
323 bn320.4%The solvency margin ratio is an indicator thatshows the ratio of the solvency margin of capital and reserves against risks that exceed normal expectations, such as the occurrence of amajor disaster or a significant drop in the priceof assets held by the company.
The solvency margin ratio is one of the indicators used by administrative authorities to judge
the soundness of an insurance company’s
management, and if the ratio is 200% or higher,
the company is considered to have “adequate
solvency to pay insurance claims.
However, since JER has a special business structure based on the “Law Concerning Earthquake
Insurance,” the solvency margin ratio is not
used as a numerical value for the administrative
authority’s criteria for issuing an improvement
order, etc.

Securities
Call loans
Monetary receivables bought
Cash and deposits
Other assets

Government bonds
Municipal bonds
Corporate bonds
Foreign securities
Other securities

(%)
500

400
335.3%

320.4%

326.6%

300
297.6%

200
193.0%

100

0
2018

2019

2020

2021

2022 (Fiscal year)

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

6

Financial Highlights in Last 5 Fiscal Years（Yen in millions）

2018

2019

2020

2021

2022

Net premiums written
Rate of change

118,67922.0%

129,2988.9%

232,82280.1%

252,468
8.4%

268,987
6.5%

Net claims paid
Rate of change

124,276
1,292.5%

26,223(78.9%)

10,187(61.2%)

150,088
1,373.2%

207,758
38.4%

Ordinary income
Rate of change

199,94297.4%

138,413(30.8%)

234,352
69.3%

254,9718.8%

413,488
62.2%

Ordinary expenses
Rate of change

199,940
97.4%

138,415(30.8%)

234,35169.3%

254,970
8.8%

413,48762.2%

Ordinary profit (loss)
Rate of change

1
—

(2)
(201.3%)

0
—

1
63.3%

0
(44.3%)Net income (loss)
Rate of change

1
—

(1)
(174.3%)0—

1351.4%

0(83.9%)Net loss ratio

113.0%

24.4%

5.4%

64.7%

85.0%

Net expense ratio

45.3%

43.3%

25.2%

22.4%

22.0%

Interest and dividend income
Rate of change

1,107(6.3%)

872(21.2%)

752(13.8%)

594(21.0%)

778
30.9%

Income yield

0.22%

0.19%

0.13%

0.10%

0.13%

Realized yield

0.09%

0.09%

0.09%

0.14%

0.09%

Common stock
Number of shares outstanding

1,000
1,000
1,000
1,000
1,000
2 mil. shares 2 mil. shares 2 mil. shares 2 mil. shares 2 mil. shares

Net assets

1,543

1,537

1,538

1,529

1,501

Total assets

468,425

510,798

667,273

689,022

661,059

Underwriting reserves
Rate of change

416,700(15.9%)

466,474
11.9%

513,374
10.1%

520,6651.4%

643,330
23.6%

Of which, risk reserves
Rate of change

203,074(33.2%)

222,835
9.7%

239,8297.6%

231,150(3.6%)

333,368
44.2%

Loans
Rate of change

—
—

—
—

—
—

—
—

—
—

Securities
Rate of change

228,24814.0%

250,6489.8%

365,83446.0%

457,705
25.1%

452,280(1.2%)

Non-consolidated solvency margin
ratio

297.6%

335.3%

326.6%

193.0%

320.4%

776.01 yen

773.32 yen

773.77 yen

769.30 yen

755.24 yen

Net assets per share
Net income (loss) per share

0.79 yen(0.59 yen)

0.17 yen

0.75 yen

0.12 yen

Dividend propensity

—

—

—

—

—

Number of employees

29

27

28

30

30

Our solvency margin ratio is not to be used as a figure for the criteria for triggering improvement orders, etc. issued by administrative authorities.

7

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

EARTHQUAKE INSURANCEIN JAPANESTABLISHING THE EARTHQUAKEINSURANCE SYSTEM
Japan is well known for its frequent earthquakes. Traditionally, the thinking has been that itis difficult to provide insurance coverage for damage caused by earthquakes. One reason forthis is that nobody can be sure when an earthquake will strike. Another reason is that there isa risk that a major earthquake could cause tremendous damage. Earthquake insurance wasfor many years the subject of a great deal of research and discussion, to little avail. Despite
this, there was considerable public demand for a system of earthquake insurance on dwellingrisks to enable victims of an earthquake who have lost their homes or property to rebuild theirlife. Responding to this demand, the non-life insurance business continued to study ways tobuild such a system.
The Niigata Earthquake of June 1964 prompted efforts to establish the system. The government and the non-life insurance industry conducted a detailed examination of the earthquake insurance system, ultimately leading to the Law concerning Earthquake Insurance.
The system for earthquake insurance on dwelling risks was built based on this law and Japan
Earthquake Reinsurance Co., Ltd. (JER) was established. We play a key role in taking on full
responsibility with the reinsurance of earthquake insurance contracts entered into by non-life
insurance companies.

MECHANISM OF THE EARTHQUAKEINSURANCE SYSTEM
Earthquake insurance is arranged as an optional rider to fire insurance which covers buildings for residential use and/or personal property. Earthquake insurance cannot be purchasedon its own. If you conclude a fire insurance contract without earthquake insurance, you arerequired to seal the earthquake insurance check column of the fire insurance contract application form.
If you have entered into a fire insurance contract without earthquake insurance, you will beable to purchase earthquake insurance while your fire insurance contract is valid. In someareas, however, if an announcement warning of an earthquake has been made, you may not
be able to purchase earthquake insurance.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

8

Insurance Coverage
Loss of or damage to buildings for residential use and/or personal property through fire,
destruction, burial or flooding caused directly or indirectly by any earthquake or volcanic eruption, or resulting tsunami (hereinafter referred to as an earthquake, etc.).
Fire insurance* does not cover
1. any losses caused by fire (including the spread thereof, and expanded loss) resulting
from an earthquake, etc., and2. any fire that has spread because of an earthquake, etc. Earthquake insurance is needed
to compensate for these kinds of losses.

Insurable interests
Buildings for residential use and/or personal property
None of the following is insurable:
A building used as a plant or office, and not used for dwelling purposes, precious metals,
gems or antiques valued at 300,000 yen or more per piece, currency, securities (checks, sharecertificates, gift certificates), certificates of deposit, revenue stamps, postal stamps, automobiles and certain other items.

Term insured
Short-term, one year and long-term (two to five years)

Amount insured
The policyholder is required to set the amount insured under earthquake insurance within arange of 30-50% of the amount of insurance provided by his/her fire insurance. However, theamount insured is limited to a maximum of 50 million yen for a building** and 10 million yen
for personal property.

*
Fire insurance		
Ordinary fire insurance, long-term comprehensive insurance, deposit life comprehensive insurance, dwelling fire
insurance, householders’ comprehensive insurance, storekeepers’ comprehensive insurance and certain other types of
insurance.
**	
The amount insured of a condominium building such as apartment building is limited to 50 million yen, totaling
exclusive areas and common areas.

9Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

Payment of insurance claims
Under the Earthquake Insurance, insurance claims are paid out when the policyholder’s residential building and/or personal property have sustained total loss, large half loss, small half
loss or partial loss.
(Table 1)
Insurable objects

Residential buildings,
personal property

Degree of loss

Amount of insurance claim paid

Total loss

100% of amount insured (up to the current price* of theinsurable objects)

Large half loss

60% of amount insured (up to 60% of the current price of theinsurable objects)

Small half loss

30% of amount insured (up to 30% of the current price of theinsurable objects)

Partial loss

5% of amount insured (up to 5% of the current price of theinsurable objects)

Note:	If the degree of damage is judged to be less than a partial loss, insurance claims will not be paid.

Cases when no insurance claim is payable:• Loss or damage due to willful acts or gross negligence or violation of law• Loss or theft of the objects of the insurance• Loss or damage due to war or insurrection• Loss or damage occurring ten days or more after the earthquake• Loss or damage caused only to gates, walls, fences, and other parts that are not major
structural parts.

*
Current price		The current price is such that the amount of depreciation according to the service year is deducted from the price ofa new building.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

10

Authorization criteria of losses
Major loss assessment standards by degree of loss are as follows.
(Table 2)
Residential building

Personal property

Amount of loss of major
structural parts

Area of floor burnt down or
washed away (partial loss
applies when the residentialbuilding is flooded above
floor level)

Degree of loss of or damage
to the personal property

Total loss

50% or more of the current
price of the residentialbuilding

70% or more of the total
floor area of the residentialbuilding

80% or more of the current
price of the personal
property

Large half loss

From 40% to less than 50%of the current price of theresidential building

From 50% to less than 70%of the total floor area of theresidential building

From 60% to less than 80%of the current price of thepersonal property

Small half loss

From 20% to less than 40%of the current price of theresidential building

From 20% to less than 50%of the total floor area of theresidential building

From 30% to less than 60%of the current price of thepersonal property

From 3% to less than 20%of the current price of theresidential building

The residential building wasdamaged but the damage is
not as much as total, large
half, small half or partial
loss, although it was flooded
above the floor level or above
45 cm from the ground level.

From 10% to less than 30%of the current price of thepersonal property

Degree of loss

Partial loss*
Current price		The current price is such that the amount of depreciation according to the service year is deducted from the price ofa new building.

11

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

Limit of total amount of insurance claims to be paid
Limit of total amount of insurance claims to be paid* is limited to 12,000 billion yen as revised in April 1, 2021 per earthquake, etc. In the event the total amount of insurance claims
payable exceeds the limit, law allows insurance claims per contract to be reduced.

Premium rate
The premium rate for earthquake insurance is calculated by the General Insurance Rating
Organization of Japan** on the basis of the Law concerning General Insurance Rating Organizations. The basic rate of insurance premiums consists of a risk premium rate applicableto or appropriate for the future payment of insurance claims and a loading premium rate applicable to or appropriate for non-life insurance company expenses and agency commissions.

Premium rate = Risk premium rate + Loading rate
The Headquarters for Earthquake Research Promotion***, a government organization, published the Probabilistic Seismic Hazard Maps. The risk premium rate is calculated based on
the latest revised damage projection method to cover all earthquakes used in the preparationof the maps that are assumed to have the potential to cause damage in the future.
The premium rate actually applied is calculated by multiplying the basic rate of the insurance
premium that is set according to the structure of the residential building and the residentialbuilding to accommodate personal property that are subject to insurance and the building
location, by a discount rate set according to the earthquake-resistance capability (for which
certain confirmation documents are required).

*
Limit of total amount of insurance claims to be paid		The Law concerning Earthquake Insurance stipulates that the limit to the total insurance claims payable by thegovernment and private insurance company per earthquake, etc.. For details, see page 29 Insurance liabilities held by
JER, non-life insurance companies and the government.
**
General Insurance Rating Organization of Japan		An organization established in accordance with the Law concerning General Insurance Rating Organizations, whichaims to provide a fair basis premium rate applicable to non-life insurance.
***
The Headquarters for Earthquake Research Promotion
		Following on the lessons learned from the Great Hanshin-Awaji Earthquake Disaster, the Special Measure Law on
Earthquake Disaster Prevention was enacted to develop a system to facilitate research and study on earthquakes, andbased on this Law, the Headquarters for Earthquake Research Promotion was founded in July 1995. In March 2005,
the Headquarters for Earthquake Research Promotion published two kinds of maps as the National Seismic Hazard
Maps for Japan: the Probabilistic Seismic Hazard Map and the Scenario Earthquake Shaking Map.
		The National Seismic Hazard Maps are subject to an annual review.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

12

Basic rate (applicable to buildings and personal property)
Examples of premiums
Per one year insurance period and 10 million yen of amount insured (Unit: yen)
LocationclassificationNonwoodenWooden1

Hokkai-do, Aomori-ken, Iwate-ken, Akita-ken, Yamagata-ken, Tochigi-ken,Gunma-ken, Niigata-ken, Toyama-ken, Ishikawa-ken, Fukui-ken, Nagano-ken,Gifu-ken, Shiga-ken, Kyoto-fu, Hyogo-ken, Nara-ken, Tottori-ken, Shimane-ken,
Okayama-ken, Hiroshima-ken, Yamaguchi-ken, Fukuoka-ken, Saga-ken,
Nagasaki-ken, Kumamoto-ken, Oita-ken, Kagoshima-ken

7,300

11,2002

Miyagi-ken, Fukushima-ken, Yamanashi-ken, Aichi-ken, Mie-ken, Osaka-fu,
Wakayama-ken, Kagawa-ken, Ehime-ken, Miyazaki-ken, Okinawa-ken

11,60019,500Ibaraki-ken, Tokushima-ken, Kochi-ken

23,000Saitama-ken

26,500Chiba-ken, Tokyo-to, Kanagawa-ken, Shizuoka-ken

27,500313Prefecture

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

41,100Discount rate
Either discount rate will apply to the foregoing basic premiums rate when the building andpersonal property come under any of the following:• Discounts cannot be claimed more than once.
(a) Seismic isolated building* discountWhen the building is a seismic isolated building constructed in accordance with related
laws and accommodated personal property
Discount rate50%(b) Earthquake-resistance class** discount rate
When the building corresponds to the earthquake-resistance class as provided for by law
and accommodated personal property
Earthquake-resistance class
Discount rate

1

2

3

10%

30%

50%

(c) Earthquake-resistance diagnosis discountWhen the building was assessed as having an earthquake-resistance capacity*** equivalent
to that stipulated by related laws as a result of an earthquake-resistance diagnosis or anearthquake-resistance refurbishment, and accommodated personal property
Discount rate

10%(d) Building age discount rate
When the building was constructed during or after June 1981 and accommodated personal property
Discount rate

10%*
Seismic isolated building		A seismic isolated building is a building that is assessed to be a seismic isolated building in accordance with the related
indicators in the Japanese Housing Performance Designation Standards under the Housing Quality Guarantee Law.
**
Earthquake-resistance class		The earthquake-resistance class of a residential building is an indicator of earthquake resistance as stipulated in theJapanese Housing Performance Designation Standards based on the Housing Quality Guarantee Law. It is also used toevaluate a building for earthquake resistance as provided for in the assessment guidelines for earthquake-resistancediagnosis based on the earthquake-resistance class (as to the body of the building) established by the Ministry ofLand, Infrastructure and Transport. A description of the classes is as follows.

		 Earthquake-Resistance Class 3
		A class suggesting that the building will not topple or collapse against a force that is 1.5 times stronger than theforce of an earthquake (as provided for in Paragraph 3, Article 88, Enforcement Order of the Construction StandardAct) that occurs very rarely (once every some hundred years)
		 Earthquake-Resistance Class 2
		Class suggesting that the building will not topple or collapse against a force 1.25 times stronger than the force of anearthquake that occurs very rarely		 Earthquake-Resistance Class 1
		Class suggesting that the building will not topple or collapse against that force of earthquake that occurs very rarely
Earthquake-resistance capacity		Earthquake-resistance capacity is a seismic capacity that conforms to the current earthquake-resistance standards set
out in the Building Standards Law.
***

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

14

Premium rate of a long-term contract
Premium rate of a long-term contract (a two-to-five year contract with special conditions forpremiums) is calculated as follows:
Contract period

2 years

3 years

4 years

5 years

Coefficient

1.90

2.85

3.75

4.70

An example of insurance premiums calculated
A non wooden residential building constructed in January 2000 in Ibaraki-ken:
Fire insurance (principal contract) amount insured: Building 20 million yen; personal property
10 million yen
Period of insurance: One year
1. Setting the amount insured of earthquake insurance: In this case, the proportion insured(*) will be 50%.
Residential building: 20 million yen x 50% = 10 million yen
Personal property: 10 million yen x 50% = 5 million yen
2. Confirming the premium rate applicable: Ibaraki-ken, non wooden→ 2.30 (premium per 1,000 yen insurance)
3. Confirming the discount rate applicable: Building constructed in and after June 1981
→ 10%
Earthquake insurance premiumon residential building

Earthquake insurance premiumon personal property

Earthquake
amount insured=

10,000Earthquake insurance
premium rate

x

2.30

x

(100%

(1,000 yen)

5,000

–

10%)

=

20,700 (yen)=10,350 (yen)2.07

Earthquake
amount insured=

Discount rate

Earthquake insurance
premium rate

x

2.30

(1,000 yen)x

Discount rate

(100%

–

10%)

2.07

*
Proportion Insured		The insured earthquake amount as a percentage of the insured fire amount. The insured earthquake amountshould be 30-50% of the insured fire amount.

Income tax credit system for earthquake insurance
In the tax system revision in fiscal 2006, the old income tax credit for non-life insurance wasrevised, and an income tax credit for earthquake insurance was established to support selfhelp efforts of the public in preparation for earthquake damages. As the revision enables
deductions of up to 50,000 yen and 25,000 yen from the gross income, etc. for the purposesof income tax and the local inhabitant tax, respectively, the purchase of an earthquake insurance policy became easier.

15

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

REINSURANCE OF
EARTHQUAKE INSURANCEMECHANISM OF REINSURANCE
In the event that a major earthquake happens, it can result in large payouts of insurance claim
by insurance companies. Because there is a certain limit, however, to the ability of these companies to make payments, the government shares insurance responsibility with them throughreinsurance.
JER reinsures the earthquake insurance contracts underwritten by non-life insurance companies to take on full liability, which we homogenize before we pass on the risk proportionally tothe non-life insurance companies and the government by retrocession according to the limit
indemnity. We take up the remaining indemnity.

MECHANISM OF PAYMENT OF
INSURANCE CLAIMSThe policyholder claims insurance money to the non-life insurance company when the policyholder suffers a certain loss or damage as a result of an earthquake, etc., and the company
will pay insurance claim to the policyholder.
The non-insurance company which paid an insurance claim to the policyholder will claim thefull amount from JER through reinsurance. JER will pay the reinsurance claim in full to thenon-life insurance company.
This means that the amount of reinsurance claim paid by JER is the same as the amount of
the insurance claim paid to the policyholder by the non-life insurance company.
When a major earthquake occurs, a non-life insurance company must make a large amountof money ready so that it can pay a large number of insurance claims. To avoid problems
in paying insurance claims, the government has set forth a ministerial ordinance that covers
the payment of reinsurance claims pertaining to earthquake insurance based on a roughestimate, and promptly pays reinsurance claims based on a rough estimate (makes aprovisional payment) through JER.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

16

FLOWCHART OF REINSURANCETo enable the government, non-life insurance companies and JER to share insurance liabilities
in an equitable manner, it is necessary to first collect and standardize evenly the risks non-life
insurance companies underwrote, and then distribute them to the relevant organizations. It
is also necessary to receive insurance premiums (reinsurance and retrocession premiums) as
compensation for taking on insurance liabilities. To collect, evenly standardize and distributerisks and to give and take insurance premiums (reinsurance and retrocession premiums),
reinsurance transactions are conducted, centered on JER.
JER first reinsures earthquake insurance contracts that were underwritten by non-life insurance companies, and then divides the risks evenly. After excluding the risks held by JER, JER
implements retrocession against the government and non-life insurance companies in accordance with the burden of risks taken on by each organization.
Policyholders
Direct insurance

Application of insurance contracts (Insurance premiums)

Non-life insurance companies
Treaty A
Reinsurance(Collection andequalization of risks)

100% reinsurance(Reinsurance premiums)

Treaty A:
Earthquake Reinsurance Treaty (A)Non-life insurance companies <=> JER
Non-life insurance companies are required to conclude areinsurance contract with JER on all liabilities of earthquake
insurance contracts underwritten by them in accordance with the
Act on Earthquake Insurance, and JER is obliged to take up thefull liability for this earthquake insurance without fail. In otherwords, non-life insurance companies are not allowed to selectcertain earthquake insurance contracts underwritten by themand enter into reinsurance contract. Meanwhile, JER cannot turndown an application for a reinsurance contract to cover the
insurance liabilities taken up by non-life insurance companies inaccordance with the Act on Earthquake Insurance.

JER (Japan Earthquake Reinsurance Co., Limited)
Retrocession(Distribution of risks)Treaty C

Treaty B

Retrocession

Retrocession(Retrocession
premiums)(Retrocession
premiums)

Government(Earthquake reinsurance special account)

17

Retaining of risks
JER
Non-life insurance companies

Treaty C:
Excess of loss reinsurance
JER <=> Government

Treaty B:
Earthquake Reinsurance Treaty (B)JER <=> Non-life insurance companies

JER has entered into an excess of loss
reinsurance with the government inaccordance with the Act on Earthquake
Insurance. JER retrocedes to the government
part of the insurance liability taken up under
Treaty A. The government’s indemnity limit ofreinsurance is determined with the approvalof the Diet every year.

It has been determined that a certain part ofliabilities underwritten under Treaty A is to be
retroceded to non-life insurance companies.
The proportion of underwriting by each non-life
insurance company is determined mainly inaccordance with the outstanding balance ofrisks reserves for earthquake insurance.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

INSURANCE LIABILITIES HELD BY JER,
NON-LIFE INSURANCE COMPANIES AND
THE GOVERNMENT
The limit of the total amount of insurance claims to be paid per earthquake, etc. is set inadvance. This system is designed so that, even in the event of an earthquake as devastating
as the Great Kanto Earthquake, insurance claims can be paid without problems. The current
limit of total amount of insurance claims to be paid is set at 12.0 trillion yen. This is thereinsurance scheme that shows how JER, non-life insurance companies and the government
share and limit insurance liabilities within the limit of the total amount of insurance claims
to be paid per earthquake.
Reinsurance scheme (applicable to earthquake, etc. thattake place after April 1, 2023)

Amount of damage per earthquake, etc.

Small

Large

(Payable insurance claims)
Up to153.3 billion yen

31.5 billion

Up to216.3 billion yen

50%

153.3
billion31.5 billion

1st layer

12 trillion yen

11,739.8 billion

Approx. 99.6%

43.9 billion

Approx. 0.4%

50%

2nd layer

3rd layer

Liability limit
JER and non-life insurance companies
The government

228.7 billion yen
11,771.3 billion yen

JER and non-life insurance companies pay insurance claims up to 153.3 billion yen (1st layer)
per earthquake, etc. The government and others (non-life insurance companies and JER) shareequally insurance claims for the portion exceeding 153.3 billion yen, up to 216.3 billion yen(2nd layer). The government pays a majority of insurance claims (approximately 99.6%) forthe portion exceeding 216.3 billion yen (3rd layer).
In this way, in cases where insurance claims per earthquake, etc. exceed a certain amount,excess liabilities are shared by the relevant organizations. This is called the excess of the loss
reinsurance.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

18

Examples of insurance claims to be paid by JER, non-life
insurance companies and the government
Suppose that insurance claims amounting to 2 trillion yen for losses or damages associatedwith a single earthquake are to be paid. JER, non-life insurance companies and the government will pay each in the following amount:(Unit: billion yen)
Portion up to
153.3 billion yen

Portion over
153.3 billion yen,
and up to
216.3 billion yen

153.3

31.5

About 6.6

About 191.4

—

31.5

About 1,777.1

About 1,808.6

153.3

63.0

1,783.7

2,000.0

Claims paid

A person of burden

JER and Non-life
insurance companies
The government
Total

Portion over
216.3 billion yen,
and up to
2,000 billion yen

Total

The balance of risk reserves at JER and non-life insurancecompanies and the government liability reserves at the endof fiscal 2022
JER and non-life insurance companies save the risk premium of insurance premiums paid bypolicyholders as earthquake insurance risk reserves for the possible payment of earthquake
insurance claims while the government saves government reserves in the earthquake reinsurance special account under law. Additionally, it is necessary for all investment profits fromthese accumulated liability reserves to also be accumulated as liability reserves. In the eventthat an earthquake occurs and causes losses or damages, each of JER, non-life insurancecompanies and the government pays an insurance claim according to each liability as stipulated in the reinsurance scheme by withdrawing from reserves.
JER and Non-life insurance companies
The government

345.3 billion yen
1,995.7 billion yen

Total

2,341.0 billion yen

Note 1:	The risk reserves by the non-life insurance companies include the amount equivalent to deferred tax assets due
to tax effect accounting.
2: Government reserves will be finalized when the settlement for fiscal 2022 is approved by the Diet.

19

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

STATISTICS

Reinsurance claims paid in fiscal 2022
Reinsurance claims paid in fiscal 2022 amounted to 290.0 billion yen, including reinsurance
claims paid to cover the earthquake centered in Fukushima Prefecture’s offshore area. In
terms of numbers, 361,042 claims were paid (on the basis of insurance policies). See below
for claims paid for major earthquakes, etc.
Date of occurrence

Magnitude

No. ofpolicies

Reinsurance
claims paid
(million yen)March 16, 2022

7.4

320,920

265,427

2. Hyuganada

January 22, 2022

6.6

19,584

11,838

3. Fukushima-ken-oki

February 13, 2021

7.3

6,383

4,138

4. C
 hiba-ken Hokuseibu

October 7, 2021

5.9

5,497

3,623

5. T
 he 2018 Northern Osaka

Earthquake(Region name)
1. Fukushima-ken-oki

June 18, 2018

6.1

1,221

663

Other earthquakes

—

—

7,437

4,375

Total

—

—

361,042

290,066

The percentage of households purchasing earthquake
insurance in areas at risk of major earthquakes
No. ofhouseholds (A)(1,000households)

No. ofpolicies (B)(1,000 policies)

Percentage ofhouseholds withinsurance (B/A)(%)

Probability that an
earthquake could occur
within the next 30 years

Great Kanto

23,229

8,268

35.6

Nearly 0%–6%Tokyo metropolitan

19,522

7,093

36.3

About 70%

Nankai trough48,297

17,28735.8

70%–80%Earthquake(Region name)Note 1: JER prepared the number of households and the number of policies, assuming that major prefectures werestricken.
2: The probability that an earthquake could occur within the next 30 years is based on the 2023 version of the
National Seismic Hazard Maps for Japan of the Headquarters for Earthquake Research Promotion of theJapanese government. The probability of a Great Kanto Earthquake is that of a magnitude 8 earthquake along
the Sagami Trough. The probability of an inland earthquake in Tokyo metropolitan area is that of a magnitude
7 earthquake to be caused by a sinking plate along the Sagami Trough.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

20

Top 20 earthquakes as to reinsurance claims paid
See the table below for the top 20 earthquakes with respect to reinsurance claims paid since
the earthquake insurance system was established.
(As of March 31, 2023)
Earthquake(Region name)Date of occurrence

Magnitude

1. The 2011 off the Pacific coast of Tohoku

March 11, 2011

9.0

826,110

1,289,404

2. The 2016 Kumamoto

April 14, 2016

7.3

215,642

390,894

3. Fukushima-ken-oki

March 16, 2022

7.4

320,920

265,427

4. Fukushima-ken-oki

February 13, 2021

7.3

245,982

250,905

5. The 2018 Northern Osaka

June 18, 2018

6.1

159,369

124,831

6. The 1995 Hyogo-ken Nanbu

January 17, 1995

7.3

65,42778,346

7. The 2018 Hokkaido Eastern Iburi

September 6, 2018

6.7

73,871

53,613

8. Miyagi-ken-oki

April 7, 2011

7.2

31,01832,414

9. Miyagi-ken-oki

March 20, 2021

6.9

23,52918,938

10. Fukuoka-ken Seiho-oki

March 20, 2005

7.0

22,066

16,973

11. The 2001 Geiyo

March 24, 2001

6.7

24,453

16,942

12. T he 2004 Niigata-ken Chuetsu

October 23, 2004

6.8

12,61014,898

13. Hyuganada

January 22, 2022

6.6

19,642

11,86314. C
 hiba-ken Hokuseibu

October 7, 2021

5.9

16,426

11,007

15. T he 2007 Niigata-ken Chuetsu-oki

July 16, 2007

6.8

7,873

8,251

16. Miyagi-ken-oki

May 1, 2021

6.8

11,0288,110

17. Fukuoka-ken Seiho-oki

April 20, 2005

5.8

11,3386,430

18. The 2003 Tokachi-oki

September 26, 2003

8.0

10,553

5,990

19. Tottori-ken Chubu

October 21, 2016

6.6

7,268

5,620

June 14, 2008

7.2

8,276

5,545

20. The 2008 Iwate-Miyagi Nairiku

No. of policies

Reinsurance claims
paid (million yen)

Note: Earthquakes with government liability coverage for the earthquakes listed above are as follows, depending on
the reinsurance scheme in force at the time of the earthquake.
Earthquake(Region name)21

Government paid
(million yen)

Earthquake(Region name)Government paid
(million yen)

1. The 2011 off the Pacific coast ofTohoku587,202

4. Fukushima-ken-oki (February 13, 2021)

130,392

2. The 2016 Kumamoto

137,797

5. The 2018 Northern Osaka

18,215

3. Fukushima-ken-oki (March 16, 2022)

69,763

6. The 1995 Hyogo-ken Nanbu

6,173

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

Below are the epicenters and magnitudes of the top 20 earthquakes for which we paid reinsurance claims in the past. The number attached to the name of the earthquake is in order ofpayment amount.
As a reference, the epicenter area and the probability that an earthquake with a magnitude
of about 7 in southern Kanto, the Nankai Trough earthquake could occur within the next 30
years announced by the Headquarters for Earthquake Research Promotion of the government
are also included.*

7. The 2018 Hokkaido
Eastern Iburi (M6.7)

20. The 2008 Iwate-Miyagi Nairiku (M7.2)

12. The 2004 Niigata-ken Chuetsu (M6.8)

18. The 2003 Tokachi-oki(M8.0)

9. Miyagi-ken-oki (M6.9)
1. The 2011 off the Pacificcoast of Tohoku (M9.0)

15. The 2007 Niigata-ken Chuetsu-oki (M6.8)

8. Miyagi-ken-oki (M7.2)

19. Tottori-ken Chubu (M6.6)

16. Miyagi-ken-oki (M6.8)

10. Fukuoka-ken Seiho-oki (M7.0)

4. Fukushima-ken-oki (M7.3)

17. Fukuoka-ken
Seiho-oki (M5.8)

3. Fukushima-ken-oki (M7.4)
About M7 (M6.7 to 7.3) earthquake
caused by a sinking plate along the
Sagami Trough Around 70%
14. Chiba-ken Hokuseibu (M5.9)
Nankai Trough earthquake (about M8 – 9) 70% to 80%
11. The 2001
Geiyo (M6.7)
5. The 2018 Northern Osaka (M6.1)

2. The 2016
Kumamoto(M7.3)

6. The 1995 Hyogo-ken Nanbu (M7.3)

13. Hyuganada (M6.6)* The epicenter areas for the Sagami Trough and the Nankai Trough in the above diagram are shown as the possible largest areas.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

22

SUSTAINABILITY

JER recognizes that efforts to create a sustainable society are an important issue, and is taking the following initiatives to achieve the Sustainable
Development Goals (SDGs) adopted at the UN Summit in September 2015.

Initiatives through Business Activities
JER aims to achieve the SDGs by providing safety and security to support
the lives of those affected by earthquake disasters through the operation of
its earthquake insurance system, as the only company underwriting earthquake reinsurance on dwelling risks in Japan.
In recent years, Japan has experienced frequent natural disasters such as earthquakes,
typhoons, and torrential rains. Mean while, the probability of a major earthquake in thenear future, such as an earthquake directly under the Tokyo metropolitan area or the Nankai
Trough, is increasing. Therefore, JER will contribute to the reconstruction of the lives of disaster victims by developing a system that enables prompt and reliable reinsurance paymentseven when disasters and infectious diseases occur simultaneously.
JER will also promote understanding of earthquake insurance as a means to support thereconstruction of people’s lives after a disaster, and will use its extensive database to provide
useful information on disaster prevention and disaster mitigation. Through these such efforts
to increase the earthquake insurance take-up ratio and to contribute to disaster prevention
and disaster mitigation, JER will help build “Sustainable Cities and Communities.”

Promotingunderstanding ofearthquake insurance

Establishinga prompt payment
system in the event of
a complex disaster

Increasing in theearthquake insurance
take-up ratio

Rapidly rebuilding the lives ofdisaster victims

23Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

Providing information
useful for disasterprevention andmitigation

Encouraging ofdisaster prevention
and mitigation efforts

Providing lectures at earthquake insurance seminars held
by Independent Insurance Agents
JER Managing Director Motomi Ikeda lectured about earthquake
insurance at seminars held by the Independent Insurance Agentsof Okinawa and by the Independent Insurance Agents of Iwate.
In addition to giving a general explanation of earthquake insurance, Managing Director Ikeda described why the earthquake
insurance scheme has become what it is today (its developmentfrom its establishment up to today) and how the government isinvolved in reinsurance to ensure the strength of the scheme andto enable agents to confidently offer insurance products to customers. He gave some examples related to the Great East Japan
Earthquake.

Sending employees to universities to lecture
JER sends employees to universities to lecture about earthquake
insurance to promote people’s understanding of the earthquake
insurance scheme. In FY2022, JER lecturers provided lectures
to students enrolled in courses related to non-life insurance atfour universities: Hokkaido University, Tohoku University, Nagoya
University and Osaka University. They provided an overview ofthe earthquake insurance scheme, reinsurance mechanisms, and the roles of the government,
non-life insurance companies and JER in earthquake insurance using charts.

Beginning the distribution of videos about earthquake
insurance
JER has created an official channel on YouTube, a video sharing platform, and started to sharevideos about earthquake insurance. Shin-kun, a fifth grade boy, and his older sister, Chiichan, appear in videos. They learn
that earthquakes can occur anywhere and that insurance benefits
are helpful for rebuilding lives. Theyemphasize the importance of taking out earthquake insurance before
earthquakes occur.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

24

ESG Investment
In light of the public nature as an earthquake reinsurance company, JER aims togenerate investment income and solve social issues at the same time. JER engages
in environmental, social and governance(ESG) investment to provide funds to better companies and businesses using environmental and social criteria. JER chooses investee companies based on thecomprehensive assessment of the companies. In addition tofinancial information, JER considers companies’ ESG practices, particularly their handling of environmental and social
issues.
Through constructive dialogue with its investee companies,
JER encourages the companies to take specific measures,
including climate change measures and earthquake countermeasures. JER also asks for their understanding of andsupport for the promotion of earthquake insurance. In
FY2022, JER cooperated in the creation of an article about
the importance of enrolling in earthquake insurance published in the Aichi Disaster Prevention Newsletter (No. 19)
published by the Aichi prefectural government.
The table below shows the number of investments made by
JER in SDG bonds (bonds compliant with the International
Capital Market Association (ICMA)’s Green Bond Principles,
Social Bond Principles, Sustainability Bond Guidelines, Sustainability-Linked Bond Guidelines and Climate Transition
Finance Handbook whose proceeds are used for projects
that will contribute to the achievement of the SDGs). The
number of investments in FY2022 declined because JER reduced its investments in securities
due to an increase in insurance proceeds paid. However, JER has been investing more than
10% of its investments in securities in SDG bonds since FY2020.

Investments (number of investments) in SDG bonds

25

FY2020

FY2021

FY2022

Green Bonds

5

5

7

Social Bonds

15

23

5

Sustainability Bonds

5

7

7

Sustainability Linked Bonds

-

2

2

Total

25

37

21

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

Promoting Diversity and Inclusion
JER acts to enable employees with diverse values to have job satisfaction and fully demonstrate their capabilities.
Work style reforms
JER enabled employees to have more flexible work styles by allowing all employees to work
remotely or have staggered work hours and issuing them thin client terminals and smartphones.
During the 6th Medium-Term Management Plan, JER is reviewing internal operations to savetime and increase productivity. JER has introduced a video learning service to help employees
develop their skills and grow.
Promoting women’s active participation
JER formulated a general employer action plan under the Act on the Promotion of Female Participation and Career Advancement in the Workplacein April 2021 and has been implementing the plan.
None of JER’s line managers were women in FY2021. Now, 18.2% of line
managers are women.
In July 2022, JER achieved the highest, three-star, Eruboshi certification
program rating. The Eruboshi certification is given by the Minister of
Health, Labour and Welfare to companies with excellent conditions for thepromotion of women.
Encouraging male employees to take childcare leave
JER has declared that 100% of its eligible male employees will take childcare leave and it is encouraging them to take childcare leave.
JER introduced a month of special paid leave in FY2023. In addition toleave, JER encourages employees to work remotely and works to create anenvironment where employees can balance work and childcare.
Diversity education
In FY2022, JER provided Ikuboss training
for managers and diversity training for all
officers and employees. Through training,
JER worked to deepen understanding ofwork styles suited to the different stages oflife that people experience. LGBTQ people
held a lecture to promote understanding ofdiversity.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

26

Responding to Climate Change
JER approaches its environmental conservation activities by operating an environmental
management system under its Environmental Policy. JER has identified (1) appropriate useof electricity, (2) appropriate use of paper, and (3) appropriate disposal of waste as priority management items, and is pursuing a number of measures to reduce its environmental
impact. Specifically, we are working on energy conservation, resource conservation and recycling of resources by promoting paperless operations, reducing the amount of copier paper
used, saving electricity, and promoting green purchasing.
JER also introduced Toyota Motor Corporation’s new fuel cell vehicle (FCV), the Mirai, in July
2021. Mirai has been is called the “ultimate eco-car” because it does not emit carbon dioxide,a cause of global warming, and because it runs on a motor powered by a “fuel cell” that useshydrogen as fuel and generates electricity through a scientific reaction
with oxygen in the air.
JER began measuring greenhouse gas emissions in FY2021 in orderto understand the environmental impact of its business activities. We
will continue our efforts to realize a low-carbon society by curbing and reducing greenhousegas emissions. We will also contribute to achieving the goals of the SDGs through our environmental conservation activities.

Contributing to Local Communities and Society
Volunteer activities
JER participates in Hanasaku Machikado Volunteers in Chuo-ku and plants and grows plants
in a flowerbed in front of the head office. JER contributes to thecreation of beautiful, clean streets with flowers and greenery.
JER has a volunteer leave system that enables employees to take amonth of leave maximum to conduct social contribution activities.
Encouraging the acquisition of disaster prevention expert
qualifications
JER encourages employees to acquire disaster prevention expert qualifications to develop
personnel who are conversant in disaster prevention and crisis management and thereby enhance its ability to handle contingencies as an earthquake reinsurance company and to contribute to improving society’s disaster prevention capabilities as an entity engaging in local
disaster prevention. Approximately 60% of all officers and employees have acquired disasterprevention expert qualifications.

27

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

Financial Section

Financial Statements
1. Balance Sheets
2. Statements of Income
3. S
 tatements of Cash Flow
4. Statement of Changes in Shareholders’ Equity

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

28

FINANCIAL STATEMENTS
1. Balance Sheets(NET ASSETS)

(ASSETS)

(Yen in millions)Fiscal Year2021
(As of March
31, 2022)

Item

AmountAmountCash and deposits
Deposits

193,688
193,688

150,263150,26342

361

Call loans
Monetary receivables bought

17,99938,999457,705
25,89895,870303,916
32,020–452,280
12,17682,066
323,820
33,052
1,164

Tangible fixed assets
Buildings Other tangible fixed assets

46
20
26

215
19
196

Intangible fixed assets
Software Other intangible fixed assets

89
87
1

294
293
1

Other assets Reinsurance accounts receivable
Accounts receivable
Uncollected income
Deposits
Suspense payments
Derivatives

19,44919,090
5
236
45
71
–

18,643
18,200
6
283
45
27
79

Total assets

689,022

661,059

Securities
Government bonds
Municipal bonds
Corporate bonds
Foreign securities
Other securities(LIABILITIES)
(Yen in millions)Fiscal Year

Item

2021
(As of March
31, 2022)

2022(As of March
31, 2023)

AmountAmountUnderwriting funds
Outstanding claims
Underwriting reserves

664,942
144,276
520,665

646,152
2,822
643,330

Entrusted reserves

16,748

9,906

Other liabilities
Reinsurance accounts payable
Income taxes payable
Deposits payable
Accrued amounts payable
Derivatives

7,434
5,227
371
3
484
1,346

8,087
5,266
390
2
729
1,699

Reserve for retirement benefits

128

142

Reserve for directors’ retirement benefits

7

11

Reserve for bonus payments

22

24

Reserves under the special law
Reserve for price fluctuation

0
0

0
0

Net unrealized gains on available-for-salesecurities of earthquake insurance
Total liabilities

29

2022
(As of March
31, 2023)(1,792)(4,769)687,492

659,557(Yen in millions)2021(As of March
31, 2022)

2022(As of March
31, 2023)

Item

AmountAmountCommon stock

1,000

1,000

547

547

Fiscal Year

Retained earnings Legal reserve of retained earnings

11 Other legal reserve of retained earnings

546

546

  
Special reserves

1717  Special price fluctuation reserves3939  Retained earnings carried forward

489

490

Treasury Stock
Total shareholders’ equity
 et unrealized gains on available-for-saleNsecurities Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

(5)

(5)

1,541

1,542

(12)

(40)

(12)

(40)

1,529

1,501

689,022

661,059

Notes for fiscal 2022
1. Matters relating to accounting policies are as follows.
(1)	Appraisal standards and method of securities
and method of indication are as follows.
(i)	Available-for-sale securities are appraised according to the market price at term end.
(ii)	With respect to the unrealized gain of assets
corresponding to the underwriting reserves andentrusted reserves of earthquake insurance, theamount before tax effect deduction is shownas Net unrealized gains on other securities ofearthquake insurance in Liabilities on the form
attached to the Enforcement Rules of Insurance
Business Act. For other unrealized gains, theamount after tax effect deduction is processed
entirely according to the direct capital injection
method and indicated in Shareholders’ Equity.
The calculation of the sales price is based on
the moving average method.
(2) The appraisal of derivatives is done on the basisof market price.
(3) Although depreciation of tangible fixed assets
is calculated using the declining balance method, buildings (excluding equipment attached tobuildings) that were acquired on or after April 1,
1998 and equipment attached to buildings andstructures that were acquired on or after April
1, 2016 were depreciated using the straight-line
method.
(4) Software for in-house use that is recorded as
an intangible fixed asset is amortized using thestraight-line method over the estimated usable
life (five years).

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

(5)The conversion of foreign currency assets and liabilities into Japanese currency is processed according to the accounting standards for foreign
currency transactions.
(6)	Reserve for bad debts is written as follows against
losses from bad debts in accordance with theself-appraisal standard of assets and depreciation and reserve standards.
	
In connection with claims against debtors who
have gone bankrupt legally and formally, including bankruptcy, special liquidation or disposition
by suspension of business at a clearing house, ordebtors who are effectively bankrupt, the rest of
any of the claims deducting an estimated amountof disposable mortgage and a deductible amountby guarantee was appropriated for such reserves.

ten is recorded when reports on earthquake reinsurance premiums are received, and insurance
premiums recognized to have been ceded to nonlife insurance companies and the government arerecorded as reinsurance premiums ceded.
Moreover, claims paid are recorded when statements of earthquake reinsurance claims arereceived, and insurance claims recognized tobe recoverable by non-life insurance companies
and the government are recorded as reinsurance
claims recovered.
(12) The aggregate amount for the total amount ofoutstanding claims reported by non-life insurancecompanies and amounts of claims from non-life
insurance companies which is processed but unsettled are recorded as outstanding claims.

	

The portion of outstanding claims equivalent to
the portion covered by reinsurance in accordancewith Article 73, Paragraph 3 of the Insurance
Business Act is not recorded.
(Changes in accounting policies)
We have applied “Implementation Guidance on
Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, June 17, 2021)
from the beginning of the fiscal year 2022. In accordance with the transitional treatment set forthin Paragraph 27-2 of “Implementation Guidanceon Accounting Standard for Fair Value Measurement,” the Company has prospectively applied
the new accounting policy prescribed by “Implementation Guidance on Accounting Standard for
Fair Value Measurement.” There is no effect on
the financial statements.

In connection with the other claims, the rate ofbad debts calculated according to past bad debts
and other factors is multiplied by the amount ofclaims to appropriate for reserves.
	In addition, all claims are written after the financedepartment appraises the assets, and the result
is audited by the planning and controller department independent of the finance department toappropriate the appraisal for reserves.
	
There are no assets in the current term that are
to be appropriated for reserves and no reserve isrequired.
(7) For employees’ retirement and severance benefits, reserve for retirement benefits is appropriated according to estimated retirement allowanceliabilities at the end of the term.
	Retirement allowance liabilities are calculated using a simple method on the basis of the allowance to be supplied at the end of the term for any
employee who retires for his/her own reasons.
(8) For reserve for directors’ retirement benefits, thebenefits to be paid at the end of the term arerecorded according to the relevant in-house rules.
(9) Reserve for bonus payments is calculated according to the standards for the estimated bonuses
payable as of the end of the fiscal year underreview.
(10) To prepare for a loss from price changes ofshares and others, reserve for price fluctuation isappropriated according to Article 115, Insurance
Business Law.
(11) Reinsurance transactions are based on provisionsof earthquake reinsurance treaty concluded with
non-life insurance companies and excess of loss
reinsurance with the government. Premiums writ-

2. Financial instruments, fair value of financial instruments, and breakdown by input revel.
(1) Situation of financial instruments
We mainly hold highly rated short- and mediumterm Japanese and foreign bonds and short-term
financial instruments in preparation for reinsurance payouts. We manage assets by attaching
top priority to liquidity and safety and giving
additional consideration to profitability. It is ourpolicy to engage in derivatives trading or forward
exchange contracts to reduce the market risks offoreign-currency receivables associated with exchange fluctuations, within the limits of actual
demand. In addition, we maintain an understanding of market risks, credit risks and liquidity risks
and manage current quotations and credit information on a regular basis in this regard.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

30

(2)

Fair value of financial instruments and breakdown by input revel
The following table presents the amounts shownon the balance sheet and fair value breakdown
by input level as of March 31, 2023. Cash anddeposits, call loans, and monetary receivables
are omitted because they are settled in a shortperiod of time and their fair values are similar totheir book values.
The fair value of financial instruments are classified into the following three levels based on theobservability and materiality of the inputs usedin the fair value calculation:
Level 1: Fair value measured by the market
price of the asset or liability in active markets
among the observable inputs
Level 2: Fair value measured by the observable
inputs other than the Level 1 inputs
Level 3: Fair value measured by unobservable
inputsIf multiple inputs are used with a significant impact on the fair value measurement, the fair value
measurement is categorized in its entirety in thesame level of the fair value hierarchy as the lowest level input.
Financial instruments recorded at fair value on
the balance sheet(Yen in millions)Category

Balance sheet amount
Level 1

Level 2

Level 3

Total

Available-for-sale securities–

452,280–452,280

Government bonds–

12,176–

12,176

Municipal bonds–

82,066–82,066

Corporate bonds–

323,820–

323,820

Foreign securities–

33,052–

33,052Other securities

–

1,164

–

1,164

–

(1,619)–(1,619)–(1,619)–(1,619)Securities

Derivatives (*)
Derivatives not subject tohedge accounting
Foreign currency–(*) Derivative assets and liabilities arising from derivative transactions included in Other
assets and Other liabilities are presented on a net basis. Net debts are shown inparentheses.

Note 1: Description of the valuation techniques and inputs used in the fairvalue measurement
Securities
Government bonds, municipal bonds, corporate bonds and foreign
securities are valued using market prices. The market prices are notconsidered to be market prices on active markets and are categorized within Level 2.
The investment trusts whose market prices are not available do nothave any important restrictions on withdrawal or repurchase requests (considered to be risk) for which market participants may
request payment. The NAV of the investment trusts is thus deemed
to be the fair value and they are categorized within Level 2.

31

Derivatives
Since derivative transactions are OTC transactions and no publishedmarket prices are available, the fair value is measured using discounted cash flow analysis according to the type of transaction
and the remaining maturity. The main inputs used in the valuation
technique are interest rates and exchange rates. Fair value that canbe measured without using unobservable inputs or that has little
impact is categorized within level 2.

3. Taxes are included when preparing accounts for
consumption tax and other items.
4. Risk reserves contained in Underwriting reserves
have been deposited based on instructions for the
calculation of underwriting reserves by accumulating the amounts that result from subtracting anamount equivalent to corporate taxes from the net
premiums written and profit from operating the assets.
5. The accumulated depreciation of tangible fixed assets is 103 million yen and the advanced depreciation of tangible fixed assets is 2 million yen.
6. See below for a breakdown of outstanding claims.
(Yen in millions)

Outstanding claims (before the deduction ofoutstanding reinsurance claims)

7,093

Outstanding reinsurance claims related to theabove claims

4,270

Net outstanding claims

2,822

7. Total deferred tax assets amount to 2,564 million
yen. Deferred tax assets are all deducted from thetotal amount for a valuation reserve.
A breakdown of deferred tax assets reveals tax loss
carried forward of 2,393 million yen, unpaid business taxes of 85 million yen, a reserve for retirement
benefits of 39 million yen and unpaid special business tax of 23 million yen.
8. No event that could have a material impact on assets
or profits or losses in or after the next fiscal year
has arisen since the last day of the fiscal year underreview.
9. Net assets per share are 755.24 yen. The basis forthis calculation is that net assets are 1,501 million
yen, net assets accrued from ordinary shares are
1,501 million yen and the number of ordinary sharesat the end of the term is 1,988 million.
10. Each amount is rounded down to the nearest
whole unit.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

2. Statements of Income(Yen in millions)

Fiscal Year

2021

2022

Notes for fiscal 2022
1. See below for a breakdown of net premiums written.
(Yen in millions)(from April 1, 2021
to March 31, 2022)(from April 1, 2022
to March 31, 2023)

Item

AmountAmountReinsurance premiums ceded:

79,440Ordinary income

254,971

413,488

Net premiums written:

268,987

Underwriting income

252,930

410,599   Net premiums written

252,468

268,987462

158  Investment income on savings
premiums  Reversal of outstanding claims

Premiums written:

2. S
 ee below for a breakdown of net claims paid.
(Yen in millions)

Claims paid:–

141,454

2,040

2,864

   Interest and dividend income

594

778

   Gains on sales of securities

144

290

1,763

1,951

0

2

(462)

(158)

–

24

254,970

413,487

251,456

409,015   Net claims paid

150,088

207,758   Loss adjustment expenses

13,27020,934

Provision of outstanding reinsurance claims
related to the above claims  Commissions and brokerage fees

55,111

57,657

Net provision of outstanding claims  Provision of outstanding claims

25,695–   Provision of underwriting reserves

7,291

122,664

1,662

2,489

Investment income   Foreign exchange gains   Other investment income  Transfer of investment income on
savings premiums
Other ordinary income
Ordinary expenses
Underwriting expenses

Investment expenses   Losses on sales of securities  Losses on derivatives   Other investment expenses Operating, general and administrative
expenses
Other ordinary expenses

82,307

Net claims paid:

207,758

3. See below for a breakdown of the provision of outstanding claims (figures in parentheses are the reversal of outstanding claims).
(Yen in millions)

Provision of outstanding claims(before the deduction of outstanding
reinsurance claims)(146,150)(4,695)(141,454)

4. The interest and dividend income are given below
by category:

207

272
2,200

15

16

1,828

1,982

22

–

Securities:

768

Total:

778

22–

Ordinary income (loss)

10Extraordinary income

2

–

2

–

Extraordinary losses

290,066

Reinsurance claims recovered:

1,439  Interest expenses

Other extraordinary income

348,427

20Provision of reserve for price fluctuation

0

0

Other extraordinary losses

2–

Net income (loss) before income taxes

10Income taxes

00

Total income taxes00

Net income (loss)

1

0(Yen in millions)

Deposits:

6

Call loans:0

Monetary receivables bought:

2

5. Paper profit/loss involved in the losses on derivatives
is a loss of 1,619 million yen.
6. Net
income per share is 0.12 yen.
The basis for this calculation is such that net income is 0 million yen, net income accrued from
common stocks is 0 million yen and the term average number of common stocks amount to 1.988
million.
7. The legal effective tax rate at the end of the termis 28.00%, and the corporate tax burden after applying the tax effect is 54.56%. The difference is
explained by the following breakdown: valuation
reserve 20,389.19% and exclusion from gross revenue of reversal of taxable risk reserves related to
publicity expenses (20,452.79%).
8. Each amount is rounded down to the nearest wholeunit.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

32

3. Statements of Cash Flow
(Yen in millions)

Fiscal Year

Item

2021

2022

(from April 1, 2021
to March 31, 2022)(from April 1, 2022
to March 31, 2023)

AmountAmountNotes for fiscal 2022
1. 
Relationship of cash and cash equivalents at theend of the year with the amounts mentioned in therelevant balance sheet item.
(Yen in millions)

Cash flow from operating activities
Net income (loss) before income taxes

10

Depreciation

74

86

25,695(141,454)

Increase (decrease) in outstanding
claimsCash and deposits
Call loans(As of March
31, 2023)

193,688

150,263

42

361

Monetary receivables bought

17,99938,999Securities

457,705452,280

Deposits of a depository period
over three months

Increase (decrease) in underwriting
reserves

7,291

122,664

Increase (decrease) in entrusted
reserves(9,214)(6,841)(79,030)(79,030)

Increase (decrease) in reserve forretirement benefits

(22)

13

Monetary receivables bought other thancash equivalents(7,999)(19,999)

Increase (decrease) in reserve fordirectors’ retirement benefits(2)4Securities other than cash equivalent(457,705)(452,280)

Cash and cash equivalents

124,700

90,594

Increase (decrease) in reserve forbonus payments(0)1

Increase (decrease) in reserve forprice fluctuation

0

0

(594)

(778)

Interest and dividend income
Losses (gains) on investment insecurities

62

(18)

Foreign exchange losses (gains)(1,711)(1,625)Decrease (increase) in other assets(other than investment and financial
activities related)(1,627)932

Increase (decrease) in other liabilities(other than investment and financial
activities related)

468

283

Others274

291   Subtotal

20,695(26,439)

1,319

1,190

Interest and dividends received
Income taxes paid

(0)

(0)

22,014(25,249)

Purchase of monetary receivablesbought(22,998)(30,997)

Proceeds from sales and redemptionof monetary receivables bought

19,99918,999Net cash provided by operating activities

2. Cash flow in investing activities includes cash flowfrom the investment assets operations in the insurance business.

Cash flow from investing activities

Purchase of securities(187,139)(123,001)

Proceeds from sales and redemptionof securities

93,440126,604    Total investment assets activities(96,699)(8,395)    Total operating activities and   investment assets activities(74,685)(33,644)

Acquisition of tangible fixed assets

(7)

(198)

Others

(36)

(262)

(96,744)(8,856)

Cash flow in financing activities–– ffect of exchange rate changes on cashEand cash equivalents––

 et increase (decrease) in cash andNcash equivalents(74,729)(34,105)

Cash and cash equivalents at the
beginning of the year

199,430

124,700

Cash and cash equivalents at the endof the year

124,700

90,594

Net cash provided by investing activities

33(As of March
31, 2022)

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

4. Statement of Changes in Shareholders’ Equity
Fiscal 2021 (from April 1, 2021 to March 31, 2022)(Yen in millions)

Valuation andtranslation adjustments

Shareholder’s equity
Retained earnings
Commonstock

Legalreserve ofretainedearnings

1,000

1Balance at the
beginning of theperiodOther legal reserve of retained earnings
Total
retainedearnings

Specialreserves

Specialprice
fluctuation
reserves

Retainedearnings
carriedforward

17

39

488

546

1

1

Treasury
stock

(5)

Total
shareholders’equity

1,540

Net
Total
unrealized
valuation
gains onandavailabletranslation
for-saleadjustments
securities

(1)

(1)

Total net
assets1,538

Changes during
the period
Net income(loss)

1

Net changes
other thanshareholders’equityTotal changes
Balance at theend of the period

1,000

1

17

39

1

1

489

547

(5)

1

(10)

(10)

(10)

1

(10)

(10)

(8)

1,541

(12)

(12)

1,529

Fiscal 2022 (from April 1, 2022 to March 31, 2023)(Yen in millions)

Valuation andtranslation adjustments

Shareholder’s equity
Retained earnings
Commonstock

Legalreserve ofretainedearnings

1,000

1Balance at the
beginning of theperiodOther legal reserve of retained earnings
Total
retainedearnings

Specialreserves

Specialprice
fluctuation
reserves

Retainedearnings
carriedforward

17

39

489

547

0

0

Treasury
stock

(5)

Total
shareholders’equity

1,541

Net
Total
unrealized
valuation
gains onandavailabletranslation
for-saleadjustments
securities

(12)

(12)

Total net
assets1,529

Changes during
the period
Net income(loss)

0

Net changes
other thanshareholders’equityTotal changes
Balance at theend of the period

1,000

1

17

39

0

0

490

547

(5)

0

(28)

(28)

(28)

0

(28)

(28)

(27)

1,542

(40)

(40)

1,501

Notes for fiscal 2022
1. Matters related to the types and total number ofstocks outstanding and the types and number oftreasury stock(Stock)Issuedstock
Treasurystock

Balance asof the endof fiscal
2021

Increase in
fiscal 2022

Decrease in
fiscal 2022

Balance asof the endof fiscal
2022

Ordinary stock

2,000,000––

2,000,000

Total

2,000,000––

2,000,000

Ordinary stock

11,400––11,400Total

11,400––11,4002. Each amount is rounded down to the nearest wholeunit.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2023

34

MEMO

Management philosophy
JER will aim to be a respected company that contributes to the sustainable developmentof a prosperous and safe society through the appropriate management of the earthquake
insurance system.

Management policy
Based on our initiative and spirit of challenge,
We will establish a fair and highly transparent management system.
We will also respond promptly and decisively to changes in the social environment.

We will prepare the reinsurance payment system to enable prompt and proper actions
after a large earthquake.

We focus on liquidity and safety in asset management.

CORPORATE DATA (as of March 31, 2023)
Established:

May 30, 1966

Capital:1 billion yen

Total assets:

661.0 billion yen

Address:

Hulic Kobuna-cho Building,
8-1, Nihonbashi-kobuna-cho,
Chuo-ku, Tokyo Japan 103-0024

E-mail:jer-contact@nihonjishin.co.jp

URL:

https://www.nihonjishin.co.jp/

2023
Annual Report
Introduction to Earthquake Reinsurance in Japan