2019

Annual Report
Introduction to Earthquake Reinsurance in Japan

Contents

1

Message from the President

2Japan Earthquake Reinsurance Co., Ltd.

11

Topics12

Earthquake Insurance in Japan

20

Reinsurance of Earthquake Insurance

24

Statistics

28

Financial Section

45

Corporate Data

CORPORATE DATA (as of March 31, 2019)
Established:

May 30, 1966

Capital:1 billion yen

Total assets:

468.4 billion yen

Address:

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

Phone:

03-3664-6078

URL:

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

MESSAGE FROM
THE PRESIDENT

Chairman:

Yoshihiko Murase

President:

Makoto Sugimachi

I would like to begin this message by expressing my sincere gratitude to all our stakeholders for their continued
support.
Before moving on, I would also like to offer my heartfelt sympathy to those who are suffering as a result of therecent earthquake, the epicenter of which was in the offshore of Yamagata Prefecture. I pray for the earliest possible
reconstruction of their livelihoods.
In 2018, Japan experienced numerous natural disasters, including the earthquake centered in the northern part of
Osaka Prefecture in June and 2018 Hokkaido Eastern Iburi Earthquake in September.
Earthquake insurance was established in 1966 to stabilize the livelihoods of those affected by natural disasters likethese. In the earthquake reinsurance scheme, three players – the Japanese government, private non-life insurancecompanies and JER – work together across sectors to ensure that earthquake insurance claims are paid promptly andreliably.
Since the establishment of the earthquake insurance system, JER has adopted contributing to the maintenance anddevelopment of an affluent and safe society and becoming a company that is widely trusted by the public throughthe sound management of the household earthquake insurance system as its management philosophy as the only
company in Japan that is permitted to exclusively handle reinsurance for earthquake insurance covering dwelling risks.
JER has been working to make this philosophy a reality.
JER has always sought to make earthquake reinsurance payouts promptly and reliably in the wake of disasters suchas the Great Hanshin-Awaji Earthquake, the Great East Japan Earthquake and the Kumamoto Earthquakes as its mostimportant mission.
At the same time, JER has consistently paid close attention to managing and administering assets for futureearthquake reinsurance payouts, focusing primarily on asset liquidity and safety.
Reflecting growing interest in earthquake disaster preparedness, the number of earthquake insurance contracts has
been increasing with each year to reach an all-time high of more than 19 million policies in force as of the end of
March 2019.
JER is in the second year since it commenced the fifth medium-term business plan in fiscal 2018. Under this mediumterm business plan, we are working to build strong, sustainable earthquake insurance systems and make business
continuity management (BCM) more effective in anticipation of an inland earthquake in the Tokyo Metropolitan area. In
asset management, we pursue contributions to corporate earnings through our management capacity buildups while
guaranteeing asset liquidity and safety.
As business foundation items underpinning these initiatives, we seek to train experts and promote working conditions
that match diverse ways of working. Moreover, we build a governance system that is compatible with environmental
changes and make our management more appropriate and effective.
In this new era of Reiwa after Heisei, we will continue making efforts to understand our roles and responsibilities andexecute our duties reliably in order to contribute to the development of an earthquake insurance system based on therecognition of our social mission. We aim to become a company that is completely trusted by its stakeholders.
We hope that we can continue to count on your support as we pursue these initiatives.

July 2019

Makoto Sugimachi
President
Japan Earthquake Reinsurance Co., Ltd.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 20191

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.

FINANCIAL HIGHLIGHTSNet premiums written

Assumed net premiums written(Yen in millions)(Yen in millions)

300,000

130,000
283,534

118,679

120,000

280,000
257,239

260,000

110,000

240,000

100,000

220,000

90,000097,3020

Fiscal Year

2017

2018

Fiscal Year

2017

2018

Net unrealized gains on available-for-salesecurities of earthquake insurance
and net unrealized gains on available-for-sale securities

Net loss ratio(Yen in millions)150
113.0%
100

50

4,000

40

3,000

30
1,711

2,000

50

2

5,000

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019
1,000
11.4%

0

0
Fiscal Year

2017

2018

1,225

20
10

0

1

Fiscal Year
2017
2018
Net unrealized gains on available-for-sale securities

0Net premiums written

Assumed net premiums written(Yen in millions)(Yen in millions)

300,000

130,000
283,534

118,679

120,000

280,000
257,239

260,000

110,000

240,000
Assumed net premiums written

220,000

100,000

97,30290,000Net premiums written(Yen in millions)(Yen in millions)0300,000
Fiscal Year2017

0
130,000
Fiscal Year2018283,53420172018
118,679

120,000

280,000

Net unrealized gains on available-for-sale
110,000 securities of earthquake insurance
and net unrealized gains on available-for-sale securities
97,302100,000(Yen in millions)

257,239

260,000

Net loss ratio
240,000
150
220,000
113.0%

0100
Fiscal Year

2017

2018

5,000
90,000

50

4,000

40

3,000

0
Fiscal Year

2017

2018

30

1,711
20
Net1,225
unrealized gains on available-for-salesecurities of earthquake insurance
1,000
10
and net unrealized gains on available-for-sale securities
2,000

50
Net loss ratio

11.4%
0
150
Fiscal Year

1
0
0
5,000
Fiscal Year
2017
2018
Net unrealized gains on available-for-sale securities
4,000 of earthquake insurance(Yen in millions)

2017

2018
113.0%

100

3,000

Total assets and net assets
Breakdown of total assets
1,711
2,000
Non-consolidated solvency-margin
ratio(Yen in millions)
1,225

50

(Yen in millions)

800,000

Monetary receivables
FY20174,0001,000
bought 9,999
Call loans 141

Items

11.4%

(A) Total amount of non-consolidated solvency-margin
0(B) Total amount
549,220 of non-consolidated risk
600,000
Fiscal Year

2017

2018

468,425
Non-consolidated solvency-margin
ratio[(A) / {(B)x1/2}] x 100

400,000

1,543

1,540

200,000(Yen in millions)0800,000
Fiscal Year

2017

2018

Total assets
549,220

Net assets

0306.6 billion0 yen
Others4030
20

FY2018101203.8 billion
yen

137.0 billion yen
3,000 Fiscal Year
2017
2018
Net unrealized
gains
onavailable-for-salesecurities
379.6%
297.6%
of earthquake insurance
Deposits
Securities
2,000
211,842
228,248
Net
unrealized gains
on available-for-salesecurities
Breakdown of securities

161.5 18,192
billion yen

0Foreign

1,000

Total assets and net assets

600,000

Net unrealized gains on available-for-sale securities

0
50

0
4,000

Breakdown of total
assets Government
securities
bonds
33,818(Yen in millions)
52,578
Monetary receivablesbought 9,999
Call loans 141
Others3,000

Corporate Municipal
bonds
bonds

128,435

13,41618,192

468,425
400,000

1,540

1,543

2,000

200,000

1,000

0

0

Fiscal Year

2017

2018

Total assets

Net assets

Deposits

Securities

211,842

228,248

Breakdown of securities
Foreignsecurities Government
bonds
33,81852,578

Corporate Municipal
bonds
bonds

128,435

13,416

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

3

ORGANIZATION(As of April 1, 2019)
General meeting of shareholders
Board of auditors
Board of directors

Board of managing directors

Reinsurance
administration dept.

Planning andcontroller dept.

Audit office

No. of shares owned(1,000 shares)

Percentage of shares
owned (%)

Tokio Marine & Nichido Fire Insurance Co., Ltd.

537

26.9

Sompo Japan Nipponkoa 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

Financial dept.

Shareholders(As of March 31, 2019)
Shareholder

BOARD MEMBERS (FULL-TIME)(As of July 1, 2019)

4

Post

Name

Chairman (representative director)

Yoshihiko Murase

President (representative director)

Makoto Sugimachi

Managing director (representative director)

Shoichiroh Takemoto

Managing director (representative director)

Motomi Ikeda

Corporate auditor

Tsuyoshi Suzuki

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019RESPONSES TO MAJOR EARTHQUAKES
We consider prompt earthquake reinsurance payouts to be our most important mission.
Based on this view, we have established a standing Task Force Against Earthquake Disasterthat deals exclusively with earthquake disaster responses. Consisting of our full-time directors
and division managers, the Task Force oversees system development in preparation for major
earthquakes and carries out periodic earthquake response drills.
We also manage and operate the assets we have accumulated for the purpose of earthquake
reinsurance payouts by paying the utmost attention to their liquidity (cashability) and safety
so that reinsurance payouts are made without delay in the event of a major earthquake.

Task Force Against Earthquake Disaster
Our Task Force Against Earthquake Disaster is working to make business continuity management (BCM) more effective in preparation for an inland earthquake in the Tokyo metropolitanarea, with the view that this activity is of the utmost importance.
Immediately after the Great East Japan Earthquake, the Task Force reformed system infrastructure and relocated important systems to data centers that are more resistant to earthquakes to ensure business continuation in the event of an office disaster. In addition, theTask Force substantially reduced the risk of simultaneous disaster damage by establishing a
backup system in Okinawa. The Task Force also established a system that enables directors
and employees to continue undertaking important business from home, even in cases wheretraveling to the office becomes impossible, by building a system that can be accessed fromexternal locations. The Task Force confirms the effectiveness of this system through regular
work-at-home exercises.
In addition to regular drills by Department, including work-at-home exercises, we conduct
drills every fiscal year to handle issues, etc. that have become apparent in the drills conductedin the previous fiscal year and new drills based on reviews from a company-wide perspectiveby the Project Team (PT) Against Earthquake Disaster, comprising working-level employees. In
conducting these drills, we seek to make our preventive measures against earthquake disasters more effective by enhancing all employees’ awareness of BCM and disaster prevention.
Major drills in fiscal 2018
[Simulated overnight drills against potential risks]
We conduct drills aimed at enabling employees remaining in the office to take appropriate actions in the absence of officials in charge of BCM, assuming that an earthquake has occurredand forced them to stay overnight in the office. In fiscal 2018, the employees who attended
the drills reconfirmed storage sites and handling methods for the provisions, including fire extinguishers and fire hydrants installed in the office buildings and lanterns, emergency toilets,
storage batteries and stove burners that are always stocked within the office.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 20195

[Disaster prevention experience & learning (Sona Area
Tokyo)]
To increase employees’ awareness of preventive measures against earthquake disasters,
members of PT Against Earthquake Disaster participated in “Disaster prevention experience& learning,” which is designed to simulate the situation in the aftermath of a major earthquake, in a facility called Sona Area Tokyo. In this fiscal year, we plan to have all officers andemployees to participate in the disaster prevention experience & learning.
[Drills for processing loss adjustment expenses]
The number of claims for loss adjustment expenses increases significantly when a major
earthquake strikes. Making it impossible to handle them within the department in chargealone, employees of other departments attend the training each year to check and input themin a system. In fiscal 2018, the training was carried out for newly hired employees, with theaim of enhancing the level of processing loss adjustment expenses.

Management Based on Highly Liquid Assets
Should a disaster such as an inland earthquake in the Tokyo metropolitan area strike, wewould have to pay a tremendous amount of reinsurance claims in a short period of time. For
this reason, we always manage assets safely commensurate with our responsibilities, centeredon highly rated bonds such as highly liquid government bonds. We also hold mainly short- andmedium-term bonds to reduce the risk of price fluctuations at the time of their liquidation.

Preparations for Earthquakes
We have installed a terminal for receiving early earthquake warnings from the Japan
Meteorological Agency at our head office. We use this terminal to ensure the safety of visitors,
directors and employees. We are proceeding with a program for making business facilities,
equipment and the like at our head office earthquake-proof as well. In accordance with thepart of the Tokyo metropolitan ordinance related to measures for dealing with commuters who
are unable to get home, we store sufficient drinking water, food, daily necessities and otheritems to enable employees to stay in the office if an earthquake occurs during working hours.

6Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

System Infrastructure in Anticipation of an
Inland Earthquake in the Tokyo Metropolitan
Area
To ensure business continuity in the case of the feared inland earthquake in the Tokyo metropolitan area, in March 2013 we renovated all of our important systems and moved them
onto a virtual platform at a cutting-edge data center in Tokyo, which has Japan’s highest-level
earthquake-resistance capacity and energy utilization efficiency. To make doubly sure, we haveestablished a backup system at our data center in Okinawa, which is unlikely to be affectedby an earthquake at the same time as Tokyo, and have built a system for data synchronization
between Tokyo and Okinawa using a communications line.
Moreover, we have made our terminals thin clients and concentrated data on the virtual platform to reduce the risk of data loss and information leakage. Combined with a remote accesssystem whereby users outside the company can access the company’s system via the Internet,
we have created an environment that enables employees to use the same systems as usual ifthey have access to the Internet, even if the transportation network is disrupted by an inland
earthquake in the Tokyo metropolitan area and they are unable to come to the office.
We will continue to focus on strengthening our business continuity management in anticipation of an inland earthquake in the Tokyo metropolitan area.

Remote Access(Home)

Remote Access（Out of the office）

Temporary Office(Saitama City)

Head Office (Tokyo)

Thin Client

ActiveInternet (KDDI)

StandbyWAN

ActiveFirewall
Active/Standby

Internet (USEN)

Standby

ActiveStandby

L3Switch

Virtual Platform

L3Switch

Virtual Platform (Main)(an environment in anticipation of disasters)

Data Synchronization

Surveillance

Surveillance

Okinawa Data CenterTokyo Data Center

Japan Earthquake Reinsurance Co., Ltd. Annual Report 20197

CORPORATE GOVERNANCE
We believe that establishing corporate governance is an important management issue, andare endeavoring to manage our business in a sound and appropriate manner by establishinga transparent management system with verification functions.
Appointments
and dismissals

Appointments
General meeting and dismissalsof shareholders

Board ofdirectors

Board ofmanaging directors

Submission/Report

In-house audit

Audit
Board ofauditors

Executive division

Audit

Submission/Report

In-house
audit division

Cooperation
Appointments
and dismissals Accounting
auditors
Accounting audit

Auditing and Inspection Systems
Outside Auditing and Inspection
We are subject to inspection by the Financial Services Agency under the Insurance BusinessAct and inspection by the Ministry of Finance under the Act on Earthquake Insurance. We
also undergo accounting audits by PricewaterhouseCoopers Aarata LLC in accordance with
the Companies Act.
In-house auditing
Corporate auditors conduct audits and the Audit Division of JER, which is independent from otherdivisions, conducts in-house audits. The corporate auditors and the Audit Office work closely witheach other in a bid to ensure effective audits.
The purpose of an in-house audit is to develop and establish an internal control system. This isdone by conducting an audit to examine and evaluate various in-house systems and the executionof various internal activities fairly and objectively from the standpoint of lawfulness and rationality.
It also requires the provision of the necessary advice and recommendations based on theexamination and evaluation.
The Audit Office conducts regular audits of the internal control conditions of all divisions as well
as audits on priority themes based on the “In-house Audit Plan” for each fiscal year adopted byresolution of the Board of Directors, and the results of in-house audits are reported to the Boardof Directors, etc.

8

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

Risk management system
We have made arrangements for proper risk management execution to ensure the soundness
and safety of our management. The organizational framework and important risk management
issues are stipulated in our Integrated Risk Management Rules. Specific ways of managing various
risks – namely, asset management risks, liquidity risks, and operational risks – are prescribedin our management rules for the respective types of risks and our annual risk management
plans. Based on these rules, the planning and controller department, which is the integrated
risk management department, manages risks in an integrated manner by monitoring the risk
management situation. In addition, we have established the cross-sectional Risk Management
Committee as an advisory board that reports to our director in charge of risk management.
The Committee is making a range of proposals for issues related to risk management.
ASSET MANAGEMENT RISKS
Risks relating to asset management are classified into “market risks” and “credit risks”
for risk management, and the management standards are stipulated in the “Standards forManagement of Investment Risks.”
Market risksMarket risks include interest-rate risk, foreign exchange risk, and price volatility risk. These
are the risks of losses that investors may sustain with fluctuations in the value of assets or
debt, or in income, due to changes in a number of risk factors in the market. We manage
overall market risks both quantitatively and qualitatively. We measure the value at risk
(VaR) of interest rates and currency exchange as the amount of risk, while also monitoring
the unrealized gain/loss and price changes (sensitivity). We also apply an upper limitof retention or a loss-cut rule if necessary. In addition, we have separate divisions for
executing transactions and for handling administrative processes, respectively, thereby
enabling the supervisory and checking functions to work effectively.
Credit risks
Credit risks are the risks of a reduction in value or the disappearance of assets, which
results when the credit standing of the borrower has weakened, for example.
When purchasing securities, we limit their issuers to those with high credibility withreference to the credit rating made by rating agencies. We always check securities held
to determine credibility, and conduct individual controls to avoid a concentration on a
specific group of companies or type of business. We also measure the credit VaR based on
the default rate, etc. for managing credit risks.
Stress test
The VaR that statistically measures the amount of risks has a limit in circumstances whenfinancial market is fluctuating greatly. The stress test is used to complement monitoring insuch circumstances. The stress test examines the amount of potential losses by assuming
a situation in which risk factors, such as interest rates and exchange rates, fluctuateconsiderably.
Japan Earthquake Reinsurance Co., Ltd. Annual Report 20199

LIQUIDITY RISKS
Liquidity risks are the risks of losses that may be caused by failure to ensure the liquidityof assets against debt or by being forced to execute transactions at a disadvantageous pricedue to market turmoil, etc. These risks are important in fulfilling our social mission. We own
sufficient liquid assets by keeping in mind the possibly of having to dispose of all assets in theevent of a major earthquake. We also strive to accurately assess cash flows, thereby managing
funds appropriately.
OPERATIONAL RISKS
Operational risks are classified into “Administrative risks,” “IT system risks,” and “otheroperational risks,” and we manage these risks as appropriate given the characteristics ofeach.
Administrative risks
Administrative risks are the risks of losses that may be caused by the failure of officers,
employees, or any other members of an organization to do accurate paperwork, orby accidents, fraud, or any other improper acts. We constantly examine the rules andregulations of authority and paperwork procedures and manuals and strive to improve ourtraining programs and educational system, to ensure exact and perfect paperwork. We also
regularly check the rules and regulations through in-house auditing for conformity withrelated laws and regulations.
IT system risks
IT system risks are risks of losses that may be caused by IT system problems such as
computer system failures or glitches or by unauthorized use of a computer.
We strive to protect our information assets appropriately under our Security Policy
and Safety Measure Standards, which we established for preventing leaks of internal
information, etc., and as safety measures for our information system. In addition, we
have clarified our measures for handling crises by developing the Information System
Contingency Plan for disasters and other emergency situations.
Other operational risks
As other operational risks, we are aware of such risks as “human resource risks” (the risksof losses that may be caused by outflows or losses of human resources) and “reputationalrisks.” We strive to manage these risks with each responsible division playing the leadingrole.
* Underwriting risks are excluded from risks to be managed, because earthquake insurance on dwellingrisks has been managed under the legal system.

10

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

TOPICS

Employee Dispatches to University Lectures
We are promoting a better understanding of the earthquake insurance system by dispatchingits employees to universities as lecturers. In fiscal 2018, we sent an employee to College of
Risk Management, Nihon University in June 2018. Using diagrams, the employee gave explanations covering the outline of the earthquake insurance system, how reinsurance works, theroles played in earthquake insurance by the Japanese government, non-life insurance companies and JER and other matters to students taking courses related to nonlife insurance at theuniversity.

Major Earthquakes in the Past Year
Earthquakes that registered a maximum intensity of a weak six or above on the Japanese seismic scale in the period from June 18, 2018 to June 18, 2019 are shown in the following table.
We express its heartfelt sympathies to all those affected by the earthquakes.

Date of occurrence

Name

Magnitude(M)

Maximum seismic intensity

June 18, 2018

Earthquake whose epicenter was in thenorthern part of Osaka

6.1

Weak 6: Kita-ku (Osaka-shi),
Takatsuki-shi, Hirakata-shi,
Ibaraki-shi and Minoh-shi

September 6, 20182018 Hokkaido Eastern Iburi
Earthquake

6.7

7: Atsuma-cho

January 3, 2019

Earthquakes centered in Kumamoto
District of Kumamoto

5.1

Weak 6: Nagomi-machi

February 21, 2019

Earthquakes centered in the central
eastern part of Iburi District

5.8

Weak 6: Atsuma-cho

June 18, 2019

Earthquakes centered offshore from
Yamagata

6.7

Strong 6: Murakami-shi(Prepared by JER based on the results of a search of a seismic intensity databasepublished on the official website of the Meteorological Agency)

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201911

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.

12

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

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.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201913

Payment of insurance claims
Insurance claims are paid according to the policyholder’s earthquake insurance to cover total,
half or partial loss of the policyholder’s residential building and/or personal property.
(Table 1-1) <Policies the inception date of which is on or after January 1, 2017>
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)(Table 1-2) <Policies the inception date of which is on or before December 31, 2016>
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)

Half loss

50% of amount insured (up to 50% 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.

14

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

Authorization criteria of losses
Major loss assessment standards by degree of loss are as follows.
(Table 2-1) <Policies the inception date of which is on or after January 1, 2017>
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

(Table 2-2) <Policies the inception date of which is on or before December 31, 2016>
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

Half loss

From 20% to less than 50%of the current price of theresidential building

From 20% to less than 70%of the total floor area of theresidential building

From 30% to less than 80%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, half orpartial loss, although it was
flooded above the floor levelor above 45 cm from theground 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.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201915

Limit of total amount of insurance claims to be paid
Limit of total amount of insurance claims to be paid* is limited to 11,700 billion yen as revised in April 1, 2019 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 23 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.

16

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

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)
Locationclassification

1

2

3

PrefectureNonwoodenWoodenIwate-ken, Akita-ken, Yamagata-ken, Tochigi-ken, Gunma-ken, Toyama-ken, Ishikawaken, Fukui-ken, Nagano-ken, Shiga-ken, Tottori-ken, Shimane-ken, Okayama-ken,
Hiroshima-ken, Yamaguchi-ken, Fukuoka-ken, Saga-ken, Nagasaki-ken, Kumamotoken, Kagoshima-ken

7,100

11,600

Hokkai-do, Aomori-ken, Niigata-ken, Gifu-ken, Kyoto-fu, Hyogo-ken, Nara-ken

7,800

13,500Fukushima-ken

8,500

17,000Miyagi-ken, Yamanashi-ken, Kagawa-ken, Oita-ken, Miyazaki-ken, Okinawa-ken

10,70019,700Ehime-ken

12,00022,400

Osaka-fu

12,60022,400Aichi-ken, Mie-ken, Wakayama-ken

14,40024,700Ibaraki-ken,

15,50032,000Saitama-ken,

17,80032,000Tokushima-ken, Kochi-ken

15,50036,500Chiba-ken, Tokyo-to, Kanagawa-ken, Shizuoka-ken

25,00038,900Japan Earthquake Reinsurance Co., Ltd. Annual Report 201917

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.

18

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

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

2.80

3.70

4.60

An example of insurance premiums calculated
A wooden residential building constructed in January 2000 in Hyogo-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: Hyogo-ken, wooden→ 1.35 (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

1.35

x

(100%

(1,000 yen)

5,000

Earthquake insurance
premium ratex

(1,000 yen)

–

10%)

=

12,200 (yen)=6,100 (yen)

1.22

Earthquake
amount insured=

Discount rate

1.35

x

Discount rate

(100%

–

10%)

1.22

*
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.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201919

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.

20

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

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)

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 201921

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 11.7 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, 2019)

Small

Amount of damage per earthquake, etc.

Large

(Payable insurance claims)
Up to87.1 billion yen

Up to153.7 billion yen

33.3 billion

11.7 trillion yen

50%

87.1
billion

11,532.9 billion
33.3 billion

50%
13.4 billion

1st layer

Approx. 99.9%

2nd layer

Approx. 0.1%

3rd layer

Liability limit
JER and non-life insurance companies
The government

133.8 billion yen
11,566.2 billion yen

JER and non-life insurance companies pay insurance claims up to 87.1 billion yen (1st layer)
per earthquake, etc. The government and others (non-life insurance companies and JER)
share equally insurance claims for the portion exceeding 87.1 billion yen, up to 153.7 billion
yen (2nd layer). The government pays a majority of insurance claims (approximately 99.9%)
for the portion exceeding 153.7 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.

22

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

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
87.1 billion yen

Portion over
87.1 billion yen,
and up to
153.7 billion yen

87.1

33.3

About 2.1

About 122.5

—

33.3

About 1,844.2

About 1,877.5

87.1

66.6

1,846.3

2,000.0

Claims paid

A person of burden

JER and Non-life
insurance companies
The government
Total

Portion over
153.7 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 201 8
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
Non-life insurance companies
The government

203.0 billion yen
30.6 billion yen
1,696.9 billion yen

Total

1,930.7 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 2018 is approved by the Diet.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201923

STATISTICS

Reinsurance claims paid in fiscal 2018
Reinsurance claims paid in fiscal 2018 amounted to 156.5 billion yen, including earthquake
reinsurance claims paid to cover the 2018 Northern Osaka Earthquake and the 2018 Hokkaido Eastern Iburi Earthquake. In terms of numbers, 192,623 claims were paid (on the basisof insurance policies). See below for claims paid for major earthquakes.
Earthquake(Region name)
1. The 2018 Northern Osaka
2. The 2018 Hokkaido Eastern Iburi

Date of occurrence

Magnitude

No. ofpolicies

Reinsurance
claims paid
(million yen)

June 18, 20186.1

130,542

107,151
38,670

September 6, 2018

6.7

48,447

3. The 2016 Kumamoto

April 14, 2016

7.3

3,309

3,543

4. The 2011 off the Pacific coast of Tohoku

March 11, 2011

9.0

4,852

3,795

5. Shimane-ken Seibu

April 9, 2018

6.1

1,545

964

Other earthquakes

—

—

3,928

2,395

Total

—

—

192,623

156,521

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

26,446

9,051

34.2

Nearly 0%–6%Tokyo metropolitan

18,724

6,496

34.7

About 70%

Nankai trough44,671

14,63632.8

70%–80%Earthquake(Region name)Note 1: Number of households is prepared based on data of the Ministry of Internal Affairs and Communications (asof January 1, 2018).
2: JER prepared the number of policies, assuming that major prefectures were stricken, based on the preliminary
figures as of the end of 2017 from the General Insurance Rating Organization of Japan.
3: The probability that an earthquake could occur within the next 30 years is based on the 2019 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 becaused by a sinking plate along the Sagami Trough.

24

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

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, 2019)
Earthquake(Region name)Date of occurrence

Magnitude

No. of policies

Reinsurance claims
paid (million yen)

1. The 2011 off the Pacificcoast o f Tohoku

March 11, 2011

9.0

817,223

1,283,313

2. The 2016 Kumamoto

April 14, 2016

7.3

209,587

385,904

3. The 2018 Northern Osaka

June 18, 20186.1

130,542

107,151

4. Hyogo-ken Nanbu

January 17, 1995

7.3

65,42778,346

5. The 2018 Hokkaido Eastern
Iburi

September 6, 2018

6.7

48,447

38,6706. Miyagi-ken-oki

April 7, 2011

7.2

31,01532,402

7. Fukuoka-ken Seiho-oki

March 20, 2005

7.0

22,066

16,973

8. Geiyo

March 24, 2001

6.7

24,453

16,942

9. Niigata-ken Chuetsu

October 23, 2004

6.8

12,60814,897

10. Niigata-ken Chuetsu-oki

July 16, 2007

6.8

7,873

8,251

11. Fukuoka-ken Seiho-oki

April 20, 2005

5.8

11,3386,430

September 26, 2003

8.0

10,553

5,990

13. Iwate-Miyagi Nairiku

June 14, 2008

7.2

8,276

5,545

14. Tottori-ken Chubu

October 21, 2016

6.6

6,872

5,382

15. Suruga-wan

August 11, 2009

6.5

9,532

5,181

16. Shizuoka-ken Tobu

March 15, 2011

6.4

5,435

4,733

17. Iwate-ken Engan Hokubu

July 24, 2008

6.8

7,756

3,973

18. Fukushima-ken Hamadori

April 11, 2011

7.0

2,377

3,681

19. Nagano-ken Chubu

June 30, 2011

5.4

2,988

3,335

20. Tottori-ken Seibu

October 6, 2000

7.3

4,079

2,869

12. Tokachi-oki

Note 1: After the 2011 off the Pacific coast of Tohoku, in accordance with our reinsurance scheme at the time, thegovernment paid 584,156 million yen and JER and non-life insurance companies paid 699,156 million yen.
2: After the 2016 Kumamoto Earthquake, in accordance with our reinsurance scheme at the time, the government
paid 135,302 million yen and JER and non-life insurance companies paid 250,602 million yen.
3: After the 2018 Northern Osaka Earthquake, in accordance with our reinsurance scheme at the time, the government paid 9,375 million yen and JER and non-life insurance companies paid 97,775 million yen.
4: After the Hyogo-ken Nanbu Earthquake in 1995, in accordance with our reinsurance scheme at the time, thegovernment paid 6,173 million yen and JER and non-life insurance companies paid 72,173 million yen.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201925

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.

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

12. Tokachi-oki (M8.0)
9. Niigata-ken Chuetsu (M6.8)
10. Niigata-ken Chuetsu-oki (M6.8)

17. Iwate-ken Engan Hokubu (M6.8)

19. Nagano-ken Chubu (M5.4)

13. Iwate-Miyagi Nairiku (M7.2)

1. The 2011 off the Pacificcoast of Tohoku (M9.0)

14. Tottori-ken Chubu (M6.6)
20. Tottori-ken Seibu (M7.3)

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

7. Fukuoka-ken Seiho-oki (M7.0)
18. Fukushima-ken Hamadori (M7.0)

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

About M7 (M6.7 to 7.3) earthquake
caused by a sinking plate along the
Sagami Trough Around 70%
16. Shizuoka-ken Tobu (M6.4)

3. The 2018 Northern Osaka (M6.1)
4. Hyogo-ken Nanbu (M7.3)
8. Geiyo (M6.7)
Nankai Trough earthquake(about M8 – 9) 70% to 80%

2. The 2016 Kumamoto (M7.3)

26

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201915. Suruga-wan (M6.5)

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201927

Financial Section

Financial Review
Indicators Showing the Main Results over the Last Five Fiscal Years
Summary of Operations
Accounting Concepts
1. Financial statements
2. Details of assets and liabilities
3. Income and loss details
4. Information about fair values, etc.

28

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

FINANCIAL REVIEWBusiness development, results, etc.
The Japanese economy continued its moderate expansion in fiscal 2018, mainly led by an increase in domestic demand such as consumer spending and capital expenditures, despite a temporary impact from earthquakes, heavy
rain and other natural disasters. However, a slowdown in the growth of the world economy that had been the driving
force behind the economic recovery in Japan began to exert an influence in the second half of the fiscal year underreview, as was seen in a decline in exports and a weak note in industrial production.
Premiums written increased 10.2% compared to the previous fiscal year, reflecting an increase in the number ofearthquake insurance contracts, reflecting heightened awareness of earthquake risks. Net claims paid and loss adjustment expenses increased sharply from the previous fiscal year, mainly consisting of payouts for the 2018 Northern Osaka and the 2018 Hokkaido Eastern Iburi Earthquake, which occurred in the fiscal year under review.
Looking at investment, investment income fell from the previous fiscal year, given tough conditions for investment
assets under the on-going situation of extremely low interest rates, despite our focus primarily on asset liquidity andsafety.
In fiscal 2018, which it positioned as the first year under the fifth medium term business plan, JER worked on 10
management items and generally achieved the targets set for those items. Under this medium-term business plan, we
are working on building strong, sustainable earthquake reinsurance systems through early recovery of private-sector
reserves.
Meanwhile, in investment, as initiatives for profitability improvement while guaranteeing asset liquidity and safety wewill develop medium-term portfolio strategies and apply to investment plans in the next fiscal year and thereafter.
Summary of earthquake insurance results① Net premiums written and net claims paid
Net premiums written, which is calculated by deducting
assumed reinsurance premiums from premiums written,
came to 118.6 billion yen (up 22.0% year on year).
In the meantime, net claims paid increased sharply to124.2 billion yen (up 1,292.5% year on year), reflecting
factors including the earthquake centered in the 2018
Northern Osaka and the 2018 Hokkaido Eastern Iburi
Earthquake.

year under review came to 30.6 billion yen (down 35.8%
year on year) after reversal of the risk reserves posted
for the past fiscal year, amounting to 20.1 billion yen in
total, for claims paid, investment loss and advertisingand publicity expenses.

② Risk reserves and underwriting reserves
JER added a total of 43.4 billion yen, including net commissions written and held of 43.3 billion yen, which was
calculated by deducting assumed reinsurance premiums, etc. from net premiums written, and net investment
income of 0.1 billion yen, to its risk reserves.
Moreover, JER implemented a reversal of the risk reserves posted for the past fiscal year for the net claims
paid of 124.2 billion yen stated above, damage researchexpenses of 9.8 billion yen, provision for outstanding
claims of 9.8 billion yen and advertising and publicity
expenses of 0.3 billion yen. As a result, risk reserves atthe end of the fiscal year under review came to 203.0
billion yen (down 33.2% year on year).
Underwriting reserves at the end of the fiscal year underreview amounted to 416.7 billion yen (down 15.9% year
on year) as a result of the addition of unearned premium
reserves to the risk reserves stated above.

Outline of investment
In investment, JER manages assets with top priority
placed on liquidity and safety followed by profitability, in
accordance with its investment policy.
As a result, total assets amounted to 468.4 billion yen(down 14.7% year on year), due to insurance claims payouts, etc. arising from the earthquakes occurred during
the fiscal year under review. Major items in JER’s portfolio included cash and deposits of 211.8 billion yen andsecurities of 228.2 billion yen.
In terms of profit and loss, amid a continued severe
environment for investment, interest and dividend income came to 1.1 billion yen and foreign exchange gain
amounted to 1.1 billion yen. Investment income, including gains on sales of securities, was 2.2 billion yen.
Meanwhile, derivatives expenses amounted to 1.8 billion
yen, and investment expenses, including loss on sales of
securities, came to 1.8 billion yen.
JER hedges foreign exchange risks in almost all its purchases of bonds denominated in foreign currencies sothat foreign exchange hedging costs are the differences
between foreign exchange gains (losses) and derivatives
gains (losses).

③ Risk reserves of direct insurance companies
JER added the balance of net premiums written of 3.0
billion yen to the risk reserves of direct insurance companies recorded as entrusted reserves. The risk reservesof direct insurance companies at the end of the fiscal

Profit and loss for the fiscal year under review
Net income for the fiscal year under review came to 1
million yen, as a result of adding and subtracting otheritems to and from interest and dividend income and subtracting income taxes and residential taxes.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201929

INDICATORS SHOWING THE MAIN RESULTS
OVER THE LAST FIVE FISCAL YEARS(Yen in millions)Fiscal Year

Division

2014

2015

2016

Net premiums written
Percentage change over the previous term

108,99418.2%

121,986
11.9%

114,114(6.5%)

97,302(14.7%)

118,679
22.0%

Net claims paid
Percentage change over the previous term

9,563
(36.3%)

5,589(41.6%)

220,905
3,852.3%

8,924(96.0%)

124,276
1,292.5%

Ordinary income
Percentage change over the previous term

119,82214.4%

129,1077.7%

289,485
124.2%

101,288(65.0%)

199,94297.4%

Ordinary expenses
Percentage change over the previous term

119,81814.6%

129,1077.8%

289,487
124.2%

101,290(65.0%)

199,940
97.4%

Ordinary profit (loss)
Percentage change over the previous term3
(98.2%)

0(98.4%)(1)(3,537.5%)

(1)
–

1
–

Net income (loss)
Percentage change over the previous term

3
–

(0)
(115.6%)1–(0)(159.8%)

1
–

1,000
2 mil. shares

1,000
2 mil. shares

1,000
2 mil. shares

1,000
2 mil. shares

1,000
2 mil. shares

Common stock
Sum of shares issued

2017

2018

Net assets

1,543

1,542

1,542

1,540

1,543

Total assets

640,137

709,408

511,297549,220

468,425

Underwriting reserves
Percentage change over the previous term

556,727
11.5%

627,34512.7%

456,745(27.2%)

495,634
8.5%

416,700(15.9%)Of the balance, risk reserves
Percentage change over the previous term

417,05610.3%

464.584
11.4%

278,846(40.0%)

303,9549.0%

203,074(33.2%)

Loans
Percentage change over the previous term

–
–

–
–

–
–

–
–

–
–

Securities
Percentage change over the previous term

391,034(25.5%)

401,751
2.7%

234,580(41.6%)

200,239(14.6%)

228,248
14.0%

Non-consolidated solvency-margin ratio

354.5%

392.1%

299.1%

379.6%

297.6%

Dividend propensity

–

–

–

–

–

No. of employees

29

28

26

28

29

Note:
JER’s solvency-margin ratio will not be used as a criterion for the administrative authorities’ order for improvement. For details, please refer to page 34.

SUMMARY OF OPERATIONS
q Indicators relating to insurance underwriting
Item: earthquake
1. Net premiums written(Yen in millions)

Division

Fiscal Year

2016

2017

2018

Premiums written

247,441

261,556

288,859Return premiums

4,342

4,316

5,325

Assumed net premiums
written (A)243,099257,239

283,534

Reinsurance premiums
ceded (B)

128,984

159,937

164,855

Net premiums written (A – B)

114,114

97,302

118,679

Notes:
1. R
 eturn premiums: Return premiums of receiving reinsurance.
2. 
Assumed net premiums: Produced by deducting return premiums
from premiums written.
3. Net premiums written: Produced by deducting the reinsurance premiums ceded from the assumed net premiums written.

30

2. Rate of premiums written by domestic and overseas contracts
Division

Fiscal Year

2016

2017

2018

100%

100%

100%

2016

2017

2018

Assumed net claims paid (A)388,527

14,786

156,521

Reinsurance claims
recovered (B)167,622

5,861

32,245

Net claims paid (A – B)

220,905

8,924

124,276

Domestic contract

3. Net claims paid
(Yen in millions)

Division

Fiscal Year

Notes:
1. 
Assumed net claims paid: Produced by deducting surrender value
from ceded insurance claims paid
2. Net claims paid: Produced by deducting reinsurance claims recoveredfrom assumed net claims paid

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

4. Net loss ratio, net expense ratio and their combined ratio(Yen in millions)

Division

Fiscal Year

2016

2017

2018

Net loss ratio

206.0%

11.4%

113.0%

Underwriting expenses

47,40949,48153,750 Insurance related operating,general and administrative
expenses

734

1,054

 Commissions and brokeragefees

46,67548,426

8. No. of reinsurers that ceded insurance contracts andtop five reinsurers for ceded reinsurance premiums
Fiscal Year

2016

2017

2018

11

9

9

1,075

No. of reinsurersthat ceded insurance
contracts

52,675Rate of top fivereinsurers’ ceded
insurance premiums

89.8%

90.4%

90.5%

Net expense ratio

41.5%

50.9%

45.3%

Combined ratio

247.5%

62.3%

158.3%

Notes:
1. Net loss ratio: (Net claims paid + loss adjustment expenses) / net
premiums written
2. Net expense ratio: (Commissions and brokerage fees + Insurance-related operating and general administrative expenses) / net premiums
written
3.	Combined ratio: Net loss ratio + net expense ratio

5. Rate of damage occurrence, the expenses ratio andrate of sum total before ceded insurance deduction
Not applicable
6. Changes in ordinary income or loss against a risein the loss rate
There are no changes in ordinary income or loss
in earthquake insurance because increases ininsurance payments are set off through the reversalof underwriting reserves in accordance of theprinciple of no loss and no profit.

Division

Note:
The number of reinsurers that ceded insurance contracts is the number
who ceded treaty reinsurance contracts of 10 million or more yen.

9. Ratio of ceded insurance premiums by rating
Not applicable
10. Contractor dividend
Not applicable
11. Conditions at the end of the current fiscal year
(runoff result) of outstanding claims (estimatedamount) at the beginning of the term
Not applicable to earthquake insurance.
12. Amount of estimated final damages associatedwith the elapse of a period from the occurrenceof accidents
Not applicable to earthquake insurance.

7. Underwriting profit(Yen in millions)

Division

Fiscal Year

2016

2017

2018

Underwriting income

284,934

99,430197,716

Underwriting expenses

284,200

98,375

196,641

Operating, general andadministrative expenses

1,075

734

1,054

Other income and expenses

–

–

–

Underwriting profit

–

–

–

Notes:
1. The above operating, general and administrative expenses are thoserelating to the underwriting of insurances mentioned in the operating, general and administrative expenses in a statement of profits andlosses.
2. Other income and expenses are those equivalent to corporate taxes
mentioned in a statement of earthquake insurance profits and losses.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201931

w Investments
3. 
Amount of interest and dividend received andinvestment assets yield (income yield)

1. Investments policy	JER is the only company in Japan that specializes
in reinsurance for earthquake insurance. JER attaches top priority to the guarantee of liquidity andsafety in earthquake reinsurance payouts because
the time and scale of an earthquake are unpredictable, and the liquidation of all investment assets ispossible. In investment, JER is striving to maintainand strengthen its capacity for earthquake reinsurance payouts through the guarantee of funds forpayments and the expansion of risk reserves.

(Yen in millions)FiscalYear

Percentage
distribution(%)

Division
Deposits

260,534

Call loans
Monetaryreceivablesbought60.7 211,842

45.2

1,040

0.2

90

0.0

141

0.0

–

–

–

–

9,999

2.1

Money trusts

0.00

5

0.00

5

0.00

0

0.00

0

0.00

0

0.00

Monetaryreceivablesbought

3

0.02

–

–

0

0.00

–

–

–

–

–

–

Securities

234,58045.9

200,23936.5

228,248

48.7

Buildings

25

0.0

24

0.0

23

0.0

Total ofinvestments
assets496,18197.0

533,54897.1

450,255

96.1

Total assets

511,297100.0

549,220100.0

468,425

100.0

–

–

–

–

–

–

1,283

0.44

1,176

0.55

1,101

0.51

Buildings

–

–

–

–

–

–

1,294

0.24

1,181

0.23

1,107

0.22

Note:
Investment assets yield (income yield): indicator showing the result of investment assets from a point of income (interest and dividend income)The numerator is composed of interest and dividend income from investment assets while the denominator is an acquisition cost based assets.

Percentage
distribution(%)

51.0 333,194

Yield (%)

7

Securities

As of the end of
fiscal 2018

Percentage
distribution(%)

Yield (%)

Call loans

Total

As of the end of
fiscal 20172018

Deposits

Money trusts(Yen in millions)

As of the end of
fiscal 20162017

Yield (%)

Division

2. Total assets and investments assets
Year

2016

Numerator = Interest and dividend income (including the amount equivalent to interest and dividend income of profit (or loss) from monetarytrust operation)
Denominator = Acquisition cost or depreciation based average balance

4. Asset management yield (realized yield)(Yen in millions)2016

Fiscal Year

2017

2018

Division

Amount ofnumerator

Amount ofdenominator

Yield onworking
assets (%)

Amount ofnumerator

Amount ofdenominator

Yield onworking
assets (%)

Amount ofnumerator

Amount ofdenominator

Yield onworking
assets (%)

Deposits

7

233,6710.00

5300,366

0.00

5

271,5290.00

Call loans

0

1,471

0.00

0

388

0.00

0

125

0.00

Monetary receivables bought

3

20,157

0.02

–

–

–

0

7,628

0.00

Money trusts

–

–

–

–

–

–

–

–

–

1,419

294,061

0.48

1,216

215,283

0.57

1,167

217,0130.54

662

251,1260.26

556

179,4250.31

491

185,171

0.27

–

–

–

–

–

–

–

–

–

757

42,9341.76

659

35,8571.84

676

31,842

2.12–

Securities
Public and corporate bonds
StocksForeign securities

–

–

–

–

–

–

–

–

Loans

Other securities

–

–

–

–

–

–

–

–

–

Buildings

–

27

–

–

25

–

–

24

–

Derivatives

3,329

–

–

929

–

–

(1,863)––

Others(3,791)––(1,404)

–

–

1,116

–

–

Total

968

549,3900.18

747

516,0640.14

426

496,322

0.09

Notes:
1. Asset management yield (realized yield): indicator to show the result of managing of assets from the point of contribution to the current profit andloss. The numerator is realized profit and loss while the denominator is an acquisition cost based assets.
Numerator = profit from asset management + investment income on savings premiums – expenses of assets management
Denominator = acquisition cost or writing-off cost based average balance
2. Profit and loss from derivatives principally involve foreign exchange forward contracts with the remainder primarily involving currency exchange of foreign
currency-denominated bonds. JER deals in foreign exchange forward contracts and other transactions for the purpose of hedging risks associated with foreign
currency-denominated bonds.

32

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

5. Market-price based overall yield (for reference)(Yen in millions)2016

Fiscal Year

2017

2018

Division

Amount ofnumerator

Amount ofdenominator

Yield onworking
assets (%)

Amount ofnumerator

Amount ofdenominator

Yield onworking
assets (%)

Amount ofnumerator

Amount ofdenominator

Yield onworking
assets (%)

Deposits

7

233,6710.00

5300,366

0.00

5

271,5290.00

Call loans

0

1,471

0.00

0

388

0.00

0

125

0.00

Monetary receivables bought

3

20,157

0.02

–

–

–

0

7,628

0.00

Money trusts

–

–

–

–

–

–

–

–

–

212

297,783

0.07

(71)

217,797(0.03)

1,656

218,239

0.76

(227)

254,512(0.09)(63)

181,922(0.04)

489

187,047

0.26

–

–

–

–

–

–

–

–

–

Foreign securities

439

43,2701.01(7)35,874(0.02)

1,166

31,192

3.74

Other securities

Securities
Public and corporate bonds
Stocks

–

–

–

–

–

–

–

–

–

Loans

–

–

–

–

–

–

–

–

–

Buildings

–

27

–

–

25

–

–

24

–

Derivatives

3,329

–

–

929

–

–

(1,863)––

Others(3,791)––(1,404)

–

–

1,116

–

–

Total

(239)

553,111(0.04)(540)

518,578(0.10)

914

497,5480.18

Notes:
1. M arket-price based overall yield: indicator showing the efficiency of operation on a market price basis. The numerator reflects realized profit and loss
and fluctuations in market price appraisal while the denominator is market-price based assets.
Numerator = (income from operated assets management + investment income on savings premium – expenses for assets management) + (after-tax
unrealized gain for the year – after-tax unrealized gain for previous year)* + fluctuation in deferred hedge profit and loss
Denominator = acquisition cost or write-off based average balance + after-tax unrealized gain for previous year of other securities + profit and loss
for the previous year related to securities for transaction* Based on the amount before tax effect deduction
2. P rofit and loss from derivatives principally involve foreign exchange forward contracts with the remainder primarily involving currency exchange of foreign
currency-denominated bonds. JER deals in foreign exchange forward contracts and other transactions for the purpose of hedging risks associated with foreign
currency-denominated bonds.

6. B alance, percentage distribution and yield of Foreign Loans & Investments(Yen in millions)

Year

As of the end of fiscal 2016

As of the end of fiscal 2017

As of the end of fiscal 2018

Percentage
distribution(%)

Percentage
distribution(%)

Percentage
distribution(%)

Division
Foreign currency denominatedForeign public and corporate bonds

14,91056.4

24,36170.0

28,903

85.5

11,525

43.6

10,460

30.0

4,915

14.5

26,435100.0

34,822100.0

33,818100.0

Yen denominatedForeign public and corporate bonds
Total
Yield on foreign loans & investments
Investment assets yield (income yield)

1.45%

1.88%

2.17%

Assets management yield (realized yield)

1.76%

1.84%

2.12%

Market-price based overall yield (for reference)

1.01%(0.02%)

3.74%

Note:
Of the yield on foreign loans & investments, the investment assets yield was calculated in the same manner as 3., Amount of interest and dividend
received and yield on investment assets (income yield) in connection with the assets involving foreign investments.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201933

e Informationonthenon-consolidated
solvency-margin ratio (the ratio that shows
the ability to pay out claims)(Yen in millions)Year
Division
Total amount of non-consolidated solvency-margin306,691

203,899

1,539

1,541

Price fluctuation reserves

1

1

Risk reserves––

303,954

203,074

Common stock, etc.

Catastrophe reserves
Reserves for ordinary bad debts

(A)

–

–

1,195

1,532

Unrealized gain and loss included land holdings––

Surplus such as premium reserves––

Funding instruments with a debt-like nature––

Surplus such as premium reserves and funding
instruments with a debt-like nature that are notincluded in the margin––

Items deductible

–

2,250

Others––161,550

137,011

General underwriting risk (RI)––

Underwriting risk in third-area insurance (R2)––

Anticipated rate of return risk (R3)

–

–

7,482

6,924

Unrealized gain/loss on available-for-salesecurities / Deferred gain/loss on hedges

Total amount of non-consolidated risk√(R1 + R2)2 + (R3 + R4)2 + R5 + R6

(B)

Investment risk (R4)(C)

As of theAs of theend ofend offiscal 2017 fiscal 2018

Management risk (R5)

3,167

2,686

Catastrophe risk (R6)

150,900

127,400

Non-consolidated solvency-margin ratio[(A) / { (B) x 1 / 2 }] x 100

379.6%

297.6%

Note:
Amounts and other figures presented above are calculated on the basisof the provisions of Article 86 and Article 87 of the Enforcement Regulations for the Insurance Business Act and Notification No. 50 of the Ministry of Finance issued in 1996.

Non-consolidated solvency-margin ratio
The non-life insurance companies deposit reserves incase that they pay insurance money for any insurance
accident that occurred or refund depository insurance
at maturity. It is also necessary for them to maintaina satisfactory ability to make payments or solvency
even in case of unusual, unforeseeable risk, including
a huge disaster or sharp drop in price of such assets
as owned by them.
The rate of “Non-life insurance company’s ability tomake payments by owned assets and reserves (A in theabove table) over any risk unforeseeable (B in the abovetable)” is indicated as the non-consolidated solvencymargin ratio (C in the above table) which is calculated
according to the pertinent rules, including the Insurance Business Law.

34

[Unforeseeable risk] (Total of risks): Sum of 1–5
1. General underwriting risk: risk associated with aninsurance accident rate that is higher than normallypredictable (other than the risk associated with ahuge disaster).
2. Anticipated ratio of return risk: the risk that may
arise for saving-type insurance if the actual yieldfrom operations is lower than it was when calculating depository insurance premiums.
3. Investment risk: management risk that might arise
when the value of assets owned including securities
changes in an unforeseeable manner.
4. Management risk: risk that might arise on business
management in an unforeseeable manner, otherthan 1–3 and 5.
5. Catastrophe risk: risk that might arise with a hugedisaster (such as the Great Kanto Earthquake)
which is normally unforeseeable.
Capability of payment by non-life insurance company
owned capital and reserves (total amount of non-consolidated solvency-margin) is the total of capital owned
by a non-life insurance company, various reserves (pricefluctuation reserve, catastrophe reserve, etc.), part of latent profit from land, and so on.
The solvency-margin ratio is one of the indicators used
when the administrative authorities check insurancecompanies to determine the soundness of management
for supervisory purposes. When the rate is 200% or
more, the insurance company is deemed satisfactory interms of its ability to make insurance and other payouts.
◎ JER has entered into a reinsurance contract with thegovernment of Japan for earthquake insurance in accordance with Law concerning Earthquake Insurance.
The law stipulates in addition that the government takes
responsibility for support and for lending funds for thepayment of insurance money. Because this is a form ofspecial business, JER’s solvency-margin ratio is not usable as a figure to enable the administrative authorities
to trigger an order for improvement, irrespective of theabove solvency-margin ratio, as provided for in Paragraph 4, Article 3, Order to specify the division statedin Paragraph 2, Article 132, Insurance Business Law.
Note: The article is as follows.
[In the event that an insurance company has entered into a reinsurance
contract with the government as stated in Paragraph 1, Article 3, Law
concerning Earthquake Insurance (law No. 73, 1966), any order to be issued according to the listed division in Section 1 of the Article applicableto the insurance company shall be issued in accordance with the list of
inapplicable division.]

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

ACCOUNTING CONCEPTS(NET ASSETS)

q Financial statements(Yen in millions)2017(As of March
31, 2018)

2018(As of March
31, 2019)

Item

AmountAmountCommon stock

1,000

1,000

545

546



Fiscal Year

1. Balance sheets(ASSETS)

(Yen in millions)2017(As of March
31, 2018)

2018(As of March
31, 2019)

Item

AmountAmount Other legal reserve of retained earnings

Cash and deposits
Deposits

333,194
333,194

211,842
211,842  Special reserves

1717  Special price fluctuation reserves3939  Retained earnings carried forward

487

489



Fiscal Year

Call loans

90

141

Monetary receivables bought

–

9,999

200,239
62,581
20,05182,78434,822

228,248
52,57813,416
128,435
33,818

Tangible fixed assets
Buildings Other tangible fixed assets

125
24
101

90
23
66

Intangible fixed assets
Software Other intangible fixed assets

261
259
1

209
208
1

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

15,30914,234
0
309
46
2
715

17,892
17,408
3
280
46
1
152

Total assets

549,220

468,425

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

Item

2017
(As of March
31, 2018)

2018(As of March
31, 2019)

AmountAmountUnderwriting funds
Outstanding claims
Underwriting reserves

497,407
1,773
495,634

428,289
11,589416,700

Entrusted reserves

37,49923,759Other liabilities
Reinsurance accounts payable
Income taxes payable
Deposits payable
Accrued amounts payable
Derivatives

11,36011,180109
561
3

12,928
11,903
189
5
666
163

Reserve for retirement benefits

154

152

Reserve for directors’ retirement benefits

913

Reserve for bonus payments

21

23

Reserves under the special law
Reserve for price fluctuation

1
1

1
1

1,225

1,711

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

00547,680

446,881

Retained earnings Legal reserve of retained earnings

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

1

1

544

545

(5)

(5)

1,539

1,541

0

1

0

1

1,540

1,543

549,220

468,425

Notes for fiscal 2018
1. Matters relating to accounting policies are as follows.
(1)	Appraisal standards and method of securities
and method of indication are as follows.
(i)	Of available-for-sale securities, those to which
the market price is applicable is 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.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

35

(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).
(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.
	
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.

36

2. Financial instruments and fair values of financial
instruments(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.
(2) Fair values of financial instruments
The table below shows the balance sheet amounts
and fair values of financial instruments and thedifferences between them as of March 31, 2019.
(Yen in millions)

Balancesheet
amountFair value

Difference(i) Cash and deposits

211,842

211,842

–

141

141

–

(iii) Monetary receivablesbought

9,999

9,999

–

(iv) Securities
Available-for-sale securities

228,248

228,248–

Total assets(ii) Call loans

450,232450,232–(v) Derivatives* to which
hedge accounting is notapplied

(11)

(11)

–

Derivatives total

(11)

(11)

–

* Derivatives recorded in other assets and other liabilities.
Net claims and debts derived from derivatives represent the net amounts, and items
whose net balance becomes debts are stated in brackets.

Note: Methods for calculating the fair values of financial instruments(i) Cash and deposits
Cash and deposits are settled in the short term and their fair values
are based on their carrying values as their fair values and carrying
values are similar.
(ii) Call loans
Call loans are settled in the short term and their fair values are
based on their carrying values as their fair values and carrying values are similar.
(iii) Monetary receivables bought
Monetary receivables bought are settled in the short term and theirfair values are based on their carrying values as their fair values andcarrying values are similar.
(iv) Securities
The fair values of securities are based on their market prices atterm end, which are reference prices in the trading statistics of theJapan Securities Dealers Association or market prices obtained
from outside vendors or brokers.
(v) Derivatives
The fair values of derivatives are determined by prices offered bycorrespondent financial institutions.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

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 147 million yen.
6. See below for a breakdown of outstanding claims.
(Yen in millions)

Outstanding claims (before the deduction ofoutstanding reinsurance claims)

14,950

Outstanding reinsurance claims related to theabove claims

3,361

Net outstanding claims

11,589

7. Total deferred tax assets amount to 533 million yen,while total deferred tax liabilities come to 0 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 426 million yen, a reserve for retirement benefits of 42 million yen, unpaid businesstaxes of 37 million yen and unpaid special local corporate tax of 15 million yen. Deferred tax liabilities
resulted mainly from unrealized gains on securitiesof 0 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 776.01 yen. The basis forthis calculation is that net assets are 1,543 million
yen, net assets accrued from ordinary shares are
1,543 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 201937

2. Statements of income(Yen in millions)

Fiscal Year

2017

2018

(from April 1, 2017
to March 31, 2018)(from April 1, 2018
to March 31, 2019)

Item

AmountOrdinary income

Notes for fiscal 2018
1. See below for a breakdown of net premiums written.
(Yen in millions)

Premiums written:

283,534

AmountReinsurance premiums ceded:

164,855

101,288

199,942

Net premiums written:

118,679

Underwriting income

99,430197,716   Net premiums written

97,302

118,679  Investment income on savings
premiums

319

103  Reversal of outstanding claims

1,808

–

–

78,933

Investment income

1,858

2,212

   Interest and dividend income

1,181

1,107

   Gains on sales of securities

63

80   Gains on derivatives929–   Foreign exchange gains

–

1,124

   Other investment income

3

3

(319)

(103)

0

13

  Reversal of policy reserve  Transfer of investment income on
savings premiums
Other ordinary income
Ordinary expenses
Underwriting expenses

9,815  Commissions and brokerage fees

48,42652,675–

9,815

Other ordinary expenses

38,888

–

1,429

1,890

22

14

–

1,863

1,386

–

20

12

1,413

1,409

71

–

  Interest paid

71–

Ordinary profit (loss)(1)

1

Extraordinary income

1–

Reversal of reserve for price fluctuation
Extraordinary losses

12,068Net provision of outstanding claims  Provision of outstanding claims Operating, general and administrative
expenses(Yen in millions)

Provision of outstanding claims(before the deduction of outstanding
reinsurance claims)

2,252

9,874

   Other investment expenses

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

Provision of outstanding reinsurance claims
related to the above claims

124,276  Foreign exchange losses

124,276

199,9402,135   Losses on derivatives

32,245

Net claims paid:

196,6418,924   Loss on sales of securities

156,521

Reinsurance claims recovered:

98,375   Net claims paid

Investment expenses(Yen in millions)

Claims paid:

101,290   Loss adjustment expenses   Provision of underwriting reserves

2. S ee below for a breakdown of net claims paid.

1

–

–

0

Provision of price fluctuation reserves–

0

Net income (loss) before income taxes(0)1

Income taxes

00

Total income taxes00

Net income (loss)(0)1

4. The interest and dividend income are given below
by category:(Yen in millions)

Deposits:

5

Call loans:0

Monetary receivables bought:

0

Securities:

1,101

Total:

1,107

5. Paper profit/loss involved in the gains on derivatives
is a loss of 11 million yen.
6. Net
income per share is 0.79 yen.
The basis for this calculation is such that net income is 1 million yen, net income accrued from
common stocks is 1 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 15.52%. The difference is
explained by the following breakdown: valuation reserve 4,906.97%, the amount of the write-off carried from publicity expenses related to risk reserves(4,952.16%).
8. Each amount is rounded down to the nearest whole
unit.

38

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

3. Statements of cash flow
(Yen in millions)

Fiscal Year

Item

2017

2018

(from April 1, 2017
to March 31, 2018)(from April 1, 2018
to March 31, 2019)

AmountAmountNotes for fiscal 2018
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 before income taxes
Depreciation

(0)

1

115

115

Increase (decrease) in outstanding
claims(1,808)

9,815

Increase (decrease) in underwriting
reserves

38,888

Increase (decrease) in entrusted
reserves
Increase (decrease) in reserve forretirement benefits

Monetary receivables bought

141

–

9,999

200,239

228,248

1,396(13,740)(14,000)(14,000)

2(1)

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

Increase (decrease) in reserve forprice fluctuation(1)

0(1,181)(1,107)

Losses (gains) on investment insecurities

(40)

(66)

Foreign exchange losses (gains)

1,904(1,110)Decrease (increase) in other assets(other than investment and financial
activities related)244(3,176)

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

1,205

1,327

Others(1,110)803   Subtotal

39,620(86,065)

1,654

1,645

(0)

(0)

41,274(84,419)

Net decrease (increase) in cash anddeposits–(19,999)

Proceeds from sales and redemptionof monetary receivables bought

–

9,999

Purchase of securities(112,994)(73,760)

Proceeds from sales and redemptionof securities

143,662

46,907    Total investment assets activities

30,667(36,852)    Total operating activities and   investment assets activities

71,941(121,272)

Net cash provided by operating activities

211,84290

Deposits of a depository period
over three months

4

Income taxes paid

333,194

Securities

4

Interest and dividends received(As of March
31, 2019)(78,933)

Increase (decrease) in reserve fordirectors’ retirement benefits

Interest and dividend income

Cash and deposits
Call loans(As of March
31, 2018)

Monetary receivables bought other thancash equivalents–(9,999)Securities other than cash equivalent(200,239)(228,248)

Cash and cash equivalents

319,284

197,983

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

Cash flow from investing activities

Acquisition of tangible fixed assets

(117)

–

Others

(114)

(28)

30,435(36,880)

Cash flow in financing activities

Net cash provided by investing activities–– ffect of exchange rate changes on cashEand cash equivalents––

 et increase (decrease) in cash andNcash equivalents

71,709(121,300)

Cash and cash equivalents at the
beginning of the year

247,574

319,284

Cash and cash equivalents at the endof the year

319,284

197,983

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201939

4. Statement of Changes in Shareholders’ Equity
Fiscal 2017 (from April 1, 2017 to March 31, 2018)(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

(0)

(0)

Treasury
stock

Total
shareholders’equity

(5)

Net
Total
unrealized
valuation
gains onandavailabletranslation
for-saleadjustments
securities

1,540

2

2

Total net
assets1,542

Changes during
the period
Net income(loss)(0)(0)

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

1,000

1

17

39

(0)

(0)

487

545

(5)

(1)

(1)

(1)

(0)

(1)

(1)

(2)

1,539

0

0

1,540

Fiscal 2018 (from April 1, 2018 to March 31, 2019)(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

487

545

1

1

Treasury
stock

Total
shareholders’equity

(5)

Net
Total
unrealized
valuation
gains onandavailabletranslation
for-saleadjustments
securities

1,539

0

0

Total net
assets1,540

Changes during
the period
Net income(loss)

1

1

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

1,000

1

17

39

1

1

489

546

Notes for fiscal 2018
1. Matters related to the types and total number ofstocks outstanding and the types and number oftreasury stock(Stock)Issuedstock
Treasury
stock

1

1

1

1

1

2

1,541

1

1

1,543

5. Dividend per share and total assets per employee(Yen in millions)
Division

Fiscal Year

Dividend per share
Net income (loss) per share

2016

2017

2018

–

–

–

0.57 yen(0.34 yen)

0.79 yen

Balance asof the endof fiscal
2017

Increase in
fiscal 2018

Decrease in
fiscal 2018

Balance asof the endof fiscal
2018

Dividend propensity

–

–

–

Net assets per share

775.67 yen

774.54 yen

776.01 yen

19,665

19,615

16,152

Ordinary stock

2,000,000––

2,000,000

Total

Notes:
1. Net income (loss) per share comes from net income (loss) / term average
number of shares
2. The number of treasury stock is deducted from producing information per share
3. The total assets per employee come from the total assets at the end of
the term / number of employees at the end of the term.

2,000,000––

2,000,000

Ordinary stock

11,400––11,400Total

11,400––11,400Total assets per employee

2. Each amount is rounded down to the nearest whole
unit.

40

(5)

1

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

5. Balance Current Maturity of securities by category
As of the end of fiscal 2017

w Details of assets and liabilities(Yen in millions)

1.	Deposits(Yen in millions)Year
Division

As of the endof fiscal 2016

As of the endof fiscal 2017

As of the endof fiscal 2018

Deposits

260,534

333,194

211,842

Ordinary deposits

236,504

309,164

187,812

Time deposits

24,03024,03024,0302.	Average balance and trading amount of commodity
securities
Not applicable
3.	Balance of securities by category and percentage
distribution(Yen in millions)

Year

As of the end of
fiscal 2016

As of the end of
fiscal 2017

Percentage
distribution(%)

Division

As of the end of
fiscal 2018

Percentage
distribution(%)

62,581

Municipal
bonds

8,834

6,960

2,327

1,928

–

–

20,051

Corporatebonds

12,45557,82910,642

1,856

–

–

82,784

–

–

–

–

–

–

–

Foreignsecurities

Stocks9,858

17,615

7,348

–

–

–

34,822Other
securities

–

–

–

–

–

–

–

35,297 119,512

32,388

3,785

–

Total

(Yen in millions)

52,578–Municipal
bonds

3,975

6,139

2,500

330

202

267

13,416

14.8

Corporatebonds

37,57557,02022,250

2,261

6,095

–

–

–

–

–

–

–

6,276

26,137

1,405

–

–

–

33,818

–

–

–

–

–

–

–

56,747 119,003

30,905

2,591

6,297

13,416

5.9

Corporatebonds

92,46739.4

82,78441.3 128,435

56.3

–

–

–

–

–

26,435

11.3

34,822

17.4

33,818–228,248

5 over 7 over
up to up to Over 10
7
10
years
years years
9,204

10.0

–

9,256 200,239–

20,051

100.0

9,256

–

10.3

200,239–

4,749

24,257100.0–

29,706

Municipal
bonds

234,580

12,069

8,919

23.0

Total

37,106

Government
bonds

52,578–4,148

3 overup to
5 years

31.3–

Government
bonds

Total

1 overup to
3 years

62,581–3 overup to
5 years

Up to
1 year

39.0

Othersecurities

1 overup to
3 years

As of the end of fiscal 2018

91,419Foreignsecurities

Up to
1 yearDivision

Percentage
distribution(%)

Government
bonds

Stocks5 over 7 over
up to up to Over 10
7
10
years
years years

–
100.0

Division

StocksForeignsecurities
Other
securities

4. Yield on securities held

Total

Total

3,231 128,435

12,702 228,248(%)

Division

Fiscal Year

2016

2017

2018

0.26

0.28

0.22

–

–

–

1.45

1.88

2.17

Investment assets yield (income yield)
Public & corporate bonds
StocksForeign securities
Other securities
Total

–

–

–

0.44

0.55

0.51

0.26

0.31

0.27

–

–

–

1.76

1.84

2.12

Assets management yield (realized yield)
Public & corporate bonds
StocksForeign securities
Other securities
Total

–

–

–

0.48

0.57

0.54

(0.04)

0.26

Market-price based overall yield (for reference)
Public & corporate bonds
StocksForeign securities
Other securities
Total(0.09)
–

–

–

1.01

(0.02)

3.74

–

–

–

0.07

(0.03)

0.76

6.	Amount of stocks held by type of business
There are no stocks.
7.	Loans
There are no notes with the following items; amountof stocks held by type of business, balance current
maturity of loan by remaining life, balance ofloans by type of collateral secured, balance andpercentage distribution of loan by designated use,balance of loan by industry and its ratio to the total,and balance of amortization of loans.
8.	Risk management credits
Not applicable

Note:
Public & corporate bonds include government bonds, municipal bonds, andcorporate bonds.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

41

9.	
Present conditions of loans involving trust withcontact for replacement of losses
Not applicable
10. Credits classified in accordance with debtor
classification
Not applicable
11. Self-appraisal of assets
We categorize assets in accordance with the level ofrisk associated with collection and the level of riskof a loss in the value by carrying out self-appraisal
and individually examining holding assets. There
were no category assets (II through IV categories)
as of March 31, 2019.

(Yen in millions)
As of the endof fiscal 2016Land

As of the endof fiscal 2017

As of the endof fiscal 2018

–

–

–

for underwriting

–

–

–

for investment

–

–

–

Buildings

25

24

23

for underwriting

25

24

23

for investment

–

–

–

–

–

–

Construction in progressfor underwriting

–

–

–

for investment

–

–

–

Total of property

25

24

23

for underwriting

25

24

23

for investment

–

–

–

–

–

–

Other tangible fixed assets

17

101

66

Total

43

125

90

Leased assets(Yen in millions)
Division–––

Reserve for individual bad debts

–

–

–

–

Reserve for specificforeign securities

–

–

–

–

Reserve for retirement benefits

151

14

12

154

Reserve for directors’ retirement
benefits

5

4

–

9

Reserve for bonus
payments

22

21

22

21

Total

Division

1
186

Balance asof the end of
fiscal 2017

Balance
Decrease
as of the end of
in fiscal 2018
fiscal 2018

Increase in
fiscal 2018

Reserve for ordinary
bad debts

–

–

–

–

Reserve for individual bad debts

–

–

–

–

Reserve for specificforeign securities

–

–

–

–

Reserve for retirement benefits

154

15

17

152

Reserve for directors’ retirement
benefits

9

4

–

13

Reserve for bonus
payments

21

23

21

23

Reserve for pricefluctuation

1

0

–

1

186

43

39

191

As of the endof fiscal 2017

As of the endof fiscal 2018

Outstanding claims

3,581

1,773

11,589Underwriting reserves

456,745495,634

416,700

Risk reserves

278,846

303,954

203,074

Unearned premium
reserves

177,899

191,679

213,625

460,327

497,407428,289

16. Level of underwriting reserves
There is no target contact.

42

1
36

(Yen in millions)(Yen in millions)

Total

–
40

As of the end of fiscal 201815.	Underwriting funds
As of the endof fiscal 2016

2
182

18. Detailed listing of shareholders’ equity
Please refer to the statement of changes in shareholders’ equity on page 40.

14. Special accountNot applicable

Year
Division

Balance
Decrease
as of the end of
in fiscal 2017
fiscal 2017

Increase in
fiscal 2017

–

Total

13. Unearned claims paid
Not applicable

Balance asof the end of
fiscal 2016

Reserve for ordinary
bad debts

Reserve for pricefluctuation

12. Tangible fixed assets by category
Year
Division

17. Detailed listing of liability reserves
As of the end of fiscal 2017

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

7. D
 epreciation expenses by category
As of the end of fiscal 2017e Income and loss details(Yen in millions)

1. Gains on sales of securities by category(Yen in millions)

Division

Fiscal Year

2016

2017

Type of asset

2018

Government bonds

2

63

80

Foreign securities

144

–

–

Total

147

63

80

2. Losses on sales of securities by category(Yen in millions)

Division

Fiscal Year

2016

2017

2018

Government bonds

–

8

1

Foreign securities

10

13

13

Total

10

22

14

3. Losses on valuation of securities
Not applicable

1

61

24

71.4

85

1

61

24

71.4

for
investment

–

–

–

–

–

Other tangible
fixed assets

153

33

52

101

34.1

Total

239

34

113

125

47.4

Intangible fixed assets
Software

504

81

244

259

48.5

Other
intangible
fixed assets

1

–

–

1

–

Total

505

81

244

261

48.3

Grand total

745

115

358

387

48.0

Acquisition
cost

Rate of
Deprecia- Aggregated Balance as
aggregatedtion indeprecia- the end ofdepreciafiscal 2018tions
fiscal 2018
tions %

Tangible fixed assets(Yen in millions)

2017

2018

Personnel expenses

3,311

651

2,496

Non personnel expenses

11,914

2,633

8,463

310

264

323

Taxes

85

for
underwriting

Type of asset

6. Business expenses (inclusive of loss adjustment)
2016

Buildings(Yen in millions)

5. Losses on disposal of fixed assets
Not applicable

Division

Tangible fixed assets

As of the end of fiscal 2018

4. Gains on disposal of fixed assets
Not applicable

Fiscal Year

Rate of
Deprecia- Aggregated Balance as
Acquisition
aggregatedtion indeprecia- the end of
cost
depreciafiscal 2017tions
fiscal 2017
tions %

Commissions and brokeragefees

46,67548,42652,675

Total

62,211

51,976

63,958Note:
Business expenses are the total of loss adjustment expense, operating,general and administrative expenses, commissions and brokerage fees
as shown in the income statement.

Buildings

85

1

62

23

72.9

for
underwriting

85

1

62

23

72.9

for
investment

–

–

–

–

–

Other tangible
fixed assets

151

34

85

66

56.1

Total

237

35

147

90

62.1

Intangible fixed assets
Software

424

79

216

208

51.0

Other
intangible
fixed assets

1

–

–

1

–

Total

426

79

216

209

50.8

Grand total

664

115

364

299

54.9

Japan Earthquake Reinsurance Co., Ltd. Annual Report 201943

(iv) Available-for-sale securities sold at the termr Information about fair values, etc.

(Yen in millions)Fiscal 2017

1. Matters related to financial instruments
For matters related to the status of financial instruments and matters related to the fair values of financial instruments, please refer to Note 2 on thebalance sheet (page 36).
2. Securities(i) Securities held for trading purposes
Not applicable(Yen in millions)

Securities whosecarrying amount
does not exceed
their costType

Acquisition
cost

Book value

Difference

Public &corporatebonds

82,83784,766

1,928

Stocks–––Foreignsecurities

500

502

2

Others–––Subtotal

83,337

85,268

1,931

Public &corporatebonds

80,70380,650

(53)

–

–

–

36,21434,320(1,894)–––

116,918

114,971(1,947)200,256

200,239(16)

OthersSubtotal
Total

As of the end of fiscal 2018Type
Public &corporate
bonds
Securities whosecarrying amountexceeds their cost

–

–

–

11,713

11,794

80

–

–

–

Subtotal

124,148

126,117

1,969

Public &corporatebonds

80,12080,106

(14)

–

–

–

22,39722,024

(372)

–

–

–

102,517

102,130(387)

226,666

228,248

1,582

StocksStocksForeignsecurities
Subtotal44

Difference
1,888

Others
Total

Book value
114,323

OthersSecurities whosecarrying amount
does not exceed
their cost

Acquisition
cost
112,434

Foreignsecurities

Sales
price

Total ofgains onsale

Total oflosseson salePublic &corporatebonds

26,02963

815,044

80

1

–

–

–

–

–
13

Stocks–Foreignsecurities

2,322

–

13

603

–

Others

–

–

–

–

–

–

28,35263

22

15,64780

14

4. Derivative transactions(i) Derivative transactions to which hedge accounting is
not applied
Currency related
As of the end of fiscal 2017
(Yen in millions)Contract amount1 year or
longerones

TypeMarketprice

Appraisal
profit and
loss

711

711

711

711

Over-the-counter transactions Forward foreign exchange contracts  Short positions   US dollar

25,414–As of the end of fiscal 2018
(Yen in millions)Contract amount1 year or
longerones

TypeMarketprice

Appraisal
profit andloss

Over-the-counter transactions(Yen in millions)

Division

Total oflosseson saleTotal

StocksForeignsecurities

Total ofgains onsale

3. Money trust
Not applicable(iii) Available-for-sale securities
As of the end of fiscal 2017

Securities whosecarrying amountexceeds their cost

Sales
price

Type

Total

(ii) Securities to be held to maturity
Not applicable

Division

Fiscal 2018

 Forward foreign exchange contracts  Short positions   US dollar   EuroTotal

28,292

–

(11)

623

–

(0)

(11)
(0)

(11)

(11)

Notes:
1. Currency related derivative transactions other than the above areomitted as there is no applicable item.
2. Calculating a market price: Foreign exchange rates using forward exchange rate provided by banks.

(ii) Derivative transactions to which hedge accounting
is applied
Not applicable

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2019

Contents

1

Message from the President

2Japan Earthquake Reinsurance Co., Ltd.

11

Topics12

Earthquake Insurance in Japan

20

Reinsurance of Earthquake Insurance

24

Statistics

28

Financial Section

45

Corporate Data

CORPORATE DATA (as of March 31, 2019)
Established:

May 30, 1966

Capital:1 billion yen

Total assets:

468.4 billion yen

Address:

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

Phone:

03-3664-6078

URL:

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

2019Annual Report
Introduction to Earthquake Reinsurance in Japan