2022
Annual Report
Introduction to Earthquake Reinsurance in Japan

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

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

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

We focus on liquidity and safety in asset management.

CORPORATE DATA (as of March 31, 2022)
Established:

May 30, 1966

Capital:1 billion yen

Total assets:

689.0 billion yen

Address:

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

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

URL:

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

Contents

1

Message from the President

2Japan Earthquake Reinsurance Co., Ltd.

5

Financial Highlights

8Earthquake Insurance in Japan

16

Reinsurance of Earthquake Insurance

20

Statistics

23

Sustainability

27

Financial Section

34

Corporate Data

MESSAGE FROM
THE PRESIDENT

Chairman:Kazuhiko Ishihara

President:

Shoji Ito

I would like to express my sincerest gratitude to all our stakeholders for their continued support.
We also wish to extend our deepest sympathies to all the people affected by the earthquake off
the coast of Fukushima Prefecture in March this year and other earthquake disasters.
Japan Earthquake Reinsurance Co., Ltd. (“JER”) has been committed to continuing key
operations such as reinsurance payouts despite the COVID crisis, with a range of measures tohelp prevent the spread of COVID-19 such as staggered commuting, teleworking and online
meetings.
Since the establishment of the earthquake reinsurance scheme in 1966, JER, the only
reinsurance company in Japan specializing in household earthquake insurance, has adopted"JER will aim to be a respected company that contributes to the sustainable developmentof a prosperous and safe society through the appropriate management of the earthquake
insurance system" as its management philosophy and has worked to realize this philosophy.
JER has sought to make prompt and reliable reinsurance payouts, its key mission, in theaftermath of disasters such as the Great Hanshin-Awaji Earthquake in 1995, the Great East
Japan Earthquake in 2011, the Kumamoto earthquakes in 2016, and the 2021 and 2022
earthquakes near Tohoku.
Given that earthquake insurance plays an important part in supporting the lives of the people
affected by such disasters, the earthquake reinsurance scheme was developed throughcollaboration between the Japanese government, private non-life insurance companies and
JER. Through the joint efforts of both the public and private sectors, the scheme is run in sucha way that it facilitates prompt and reliable earthquake insurance payouts.
Also, extreme care is taken in asset management and administration to secure reinsurance
payouts, with liquidity and safety as the top priority.
JER's 6th Medium-Term Management Plan kicked off in FY2021 and, with an eye to further
changes in the environment, we formulated a medium- to long-term corporate vision “Moving
into the next stage of security with the strength of an earthquake insurance specialist." JER
is now striving to achieve that vision. Specifically, JER aims to build on its sophisticatedmanagement and contribute to the promotion of SDGs management by pursuing a humanassets strategy and digital transformation (DX). Specifically, it will focus on the following four
strategies: (i) Promoting initiatives toward the evolution of the earthquake insurance system;(ii) Establishing an asset management system with an eye to an asset size of 1 trillion yen; (iii)
Establishing a system for prompt payouts at the time of a complex disaster; and (iv) Improving
the percentage of earthquake insurance as an accessory contract to fire insurance, as well as
supporting disaster preparedness and mitigation.
Fully recognizing our social responsibilities and mission, we will continue contributing to the"development of the earthquake insurance system" and the "realization of a safe and securesociety" through the earthquake reinsurance business, aiming to earn greater trust from ourstakeholders.
As such, we sincerely appreciate your continued support.
July 2022

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

1

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

JAPAN EARTHQUAKEREINSURANCE CO., LTD.

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

ORGANIZATION(As of April 1, 2022)
General meeting of shareholders
Board of auditors
Board of directors

Board of managing directors

Reinsurance
administration dept.

Financial dept.

Planning andcontroller dept.

Audit office

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

2

SHAREHOLDERS(As of March 31, 2022)
No. of shares owned(1,000 shares)

Percentage of shares
owned (%)

Tokio Marine & Nichido Fire Insurance Co., Ltd.

537

26.9

Sompo Japan Insurance Inc.

529

26.5

Mitsui Sumitomo Insurance Co., Ltd.

338

16.9

Aioi Nissay Dowa Insurance Co., Ltd.

255

12.8

AIG General Insurance Company, Ltd.

123

6.2

The Toa Reinsurance Co., Ltd.

93

4.7

Nisshin Fire & Marine Insurance Co., Ltd.

61

3.1

The Kyoei Fire & Marine Insurance Co., Ltd.

34

1.7

Rakuten General Insurance Co., Ltd.

8

0.4

SECOM General Insurance Co., Ltd.

7

0.4

Shareholder

BOARD MEMBERS (FULL-TIME)(As of July 1, 2022)

3

Post

Name

Chairman (representative director)

Kazuhiko Ishihara

President (representative director)

Shoji ItoManaging director (representative director)

Motomi Ikeda

Managing director (representative director)

Hiroyuki Hata

Corporate auditor

Tsuyoshi Suzuki

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

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

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

Management policy

Medium- to Long-Term
Corporate Vision

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

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

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

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

The earthquake insurance
system

New
Medium-Term
Management
Plan

We focus on liquidity and safety in asset management.

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

Promoting initiatives toward the evolution of
the earthquake insurance system

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

The emergency
response system

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

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

The system for
preparing for disasters

Human assets strategy

Promotion of digital transformation

Sophistication of management foundations andto the promotion of SDGs management

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

4

FINANCIAL HIGHLIGHTS

Premiums Written
329 bnPremiums written = Gross premiums written –Cancellation refunds, other refunds(Yen in billions)
340
320

328

329

2020

2021 (Fiscal year)

311

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

300
283
280
257

260
240

≈
0

2017

2018

2019

Net Premiums Written

Net Loss Ratio

252 bn64.7%(Yen in billions)

(%)
120

Net premiums written = Premiums written –Reinsurance premiums ceded
300

Net loss ratio = (Net claims paid + Lossadjustment expenses) ÷ Net premiums written
113.0%

252

250

232

90

64.7%

200
60

150
118
100

129

97

30

0

0

24.4%
11.4%

50

2017

2018

2019

2020

2017

5.4%
2018

2019

2020

2021 (Fiscal year)

2021 (Fiscal year)

Net Claims Paid

Net Expense Ratio

150 bn22.4%(Yen in billions)(%)
55

Net claims paid = Claims paid –Reinsurance claims recovered
180

150

150

Net expense ratio = Underwriting expenses ÷
Net premiums written
50.9%

50
45.3%
45

124

43.3%

120
40

90

35

60

30
25.2%

10

8
0

5

25

26

30

22.4%

20
2017

2017

2018

2019

2020

2021 (Fiscal year)

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

2018

2019

2020

2021 (Fiscal year)Combined Ratio

Total Assets, Net Assets

87.1%

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

Total assets(Yen in billions)
800

Combined ratio = Net loss ratio + Net expense
ratio

689

667

(%)

600

200

3

549

510

468

158.3%

400

150

2
1.5

87.1%

100

1.5

1.5

1.5

1.5

200

1

67.7%
62.3%

0

50
30.6%
0

2017

2018

2019

2020

2017

2018

2019

2020

0
2021 (Fiscal year)

Breakdown of total assets

2021 (Fiscal year)

19 bn

Breakdown of securities
193 bnNon-consolidated
Solvency Margin Ratio

95 bn

17 bn
0 bn

193.0%

25 bn

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

303 bnGovernment bonds
Municipal bonds

Securities
Call loans
Monetary receivables bought
Cash and deposits
Other assets

Corporate bonds
Foreign securities

(%)
500

400

379.6%
335.3%

326.6%

300
297.6%

193.0%

200

100

0
2017

2018

2019

2020

2021 (Fiscal year)

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

6

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

2017

2018

2019

2020

2021

Net premiums written
Rate of change

97,302(14.7%)

118,67922.0%

129,2988.9%

232,82280.1%

252,468
8.4%

Net claims paid
Rate of change

8,924(96.0%)

124,276
1,292.5%

26,223(78.9%)

10,187(61.2%)

150,088
1,373.2%

Ordinary income
Rate of change

101,288(65.0%)

199,94297.4%

138,413(30.8%)

234,352
69.3%

254,971
8.8%

Ordinary expenses
Rate of change

101,290(65.0%)

199,940
97.4%

138,415(30.8%)

234,35169.3%

254,970
8.8%

(1)
—

1
—

(2)
(201.3%)

0
—

1
63.3%

(0)
(159.8%)1—(1)(174.3%)0—

1351.4%Net loss ratio

11.4%

113.0%

24.4%

5.4%

64.7%

Net expense ratio

50.9%

45.3%

43.3%

25.2%

22.4%

Interest and dividend income
Rate of change

1,181(8.7%)

1,107(6.3%)

872(21.2%)

752(13.8%)

594(21.0%)

Income yield

0.23%

0.22%

0.19%

0.13%

0.10%

Realized yield

0.14%

0.09%

0.09%

0.09%

0.14%

Ordinary profit (loss)
Rate of change
Net income (loss)
Rate of change

Common stock
Number of shares outstanding

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

Net assets

1,540

1,543

1,537

1,538

1,529

Total assets

549,220

468,425

510,798

667,273

689,022

Underwriting reserves
Rate of change

495,634
8.5%

416,700(15.9%)

466,474
11.9%

513,374
10.1%

520,665
1.4%

Of which, risk reserves
Rate of change

303,9549.0%

203,074(33.2%)

222,835
9.7%

239,8297.6%

231,150(3.6%)

Loans
Rate of change

—
—

—
—

—
—

—
—

—
—

Securities
Rate of change

200,239(14.6%)

228,24814.0%

250,6489.8%

365,83446.0%

457,705
25.1%

Non-consolidated solvency margin
ratio

379.6%

297.6%

335.3%

326.6%

193.0%Net assets per share

774.54 yen

776.01 yen

773.32 yen

773.77 yen

769.30 yen

Net income (loss) per share(0.34 yen)

0.79 yen(0.59 yen)

0.17 yen

0.75 yen

Dividend propensity

—

—

—

—

—

Number of employees

28

29

27

28

30

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

7

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

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

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

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

8

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

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

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

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

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

9Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

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

Residential buildings,
personal property

Degree of loss

Amount of insurance claim paid

Total loss

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

Large half loss

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

Small half loss

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

Partial loss

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

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

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

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

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

10

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

Personal property

Amount of loss of major
structural parts

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

Degree of loss of or damage
to the personal property

Total loss

50% or more of the current
price of the residentialbuilding

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

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

Large half loss

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

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

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

Small half loss

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

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

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

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

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

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

Degree of loss

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

11

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

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

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

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

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

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

12

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

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

7,300

11,2002

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

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

23,00041,100Saitama-ken

26,50041,100Chiba-ken, Tokyo-to, Kanagawa-ken, Shizuoka-ken

27,50041,100313Prefecture

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

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

1

2

3

10%

30%

50%

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

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

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

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

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

14

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

2 years

3 years

4 years

5 years

Coefficient

1.90

2.85

3.75

4.70

An example of insurance premiums calculated
A non wooden residential building constructed in January 2000 in Saitama-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: Saitama-ken, non wooden→ 2.65 (premium per 1,000 yen insurance)
3. Confirming the discount rate applicable: Building constructed in and after June 1981
→ 10%
Earthquake insurance premiumon residential building

Earthquake insurance premiumon personal property

Earthquake
amount insured=

10,000Earthquake insurance
premium rate

x

2.65

x

(100%

(1,000 yen)

5,000

–

10%)

=

23,900 (yen)=11,950 (yen)

2.39

Earthquake
amount insured=

Discount rate

Earthquake insurance
premium rate

x

2.65

(1,000 yen)x

Discount rate

(100%

–

10%)

2.39

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

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

15

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

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

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

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

16

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

Policyholders
Direct insurance

Application of insurance contracts (Insurance premiums)

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

100% reinsurance(Reinsurance premiums)

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

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

Treaty B

Retrocession

Retrocession(Retrocession
premiums)(Retrocession
premiums)

Government(Earthquake reinsurance special account)

17

Retaining of risks
JER
Non-life insurance companies

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

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

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

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

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

INSURANCE LIABILITIES HELD BY JER,
NON-LIFE INSURANCE COMPANIES AND
THE GOVERNMENT
The limit of the total amount of insurance claims to be paid per earthquake, etc. is set inadvance. This system is designed so that, even in the event of an earthquake as devastating
as the Great Kanto Earthquake, insurance claims can be paid without problems. The current
limit of total amount of insurance claims to be paid is set at 12.0 trillion yen. This is thereinsurance scheme that shows how JER, non-life insurance companies and the government
share and limit insurance liabilities within the limit of the total amount of insurance claims
to be paid per earthquake.
Reinsurance scheme (applicable to earthquake, etc. thattake place after April 1, 2021)

Amount of damage per earthquake, etc.

Small

Large

(Payable insurance claims)
Up to125.9 billion yen

70.1 billion

Up to266.1 billion yen

50%

125.9
billion70.1 billion

1st layer

12 trillion yen

11,705.0 billion

Approx. 99.8%

28.9 billion

Approx. 0.2%50%

2nd layer

3rd layer

Liability limit
JER and non-life insurance companies
The government

224.9 billion yen
11,775.1 billion yen

JER and non-life insurance companies pay insurance claims up to 125.9 billion yen (1st layer)
per earthquake, etc. The government and others (non-life insurance companies and JER) shareequally insurance claims for the portion exceeding 125.9 billion yen, up to 266.1 billion yen(2nd layer). The government pays a majority of insurance claims (approximately 99.8%) forthe portion exceeding 266.1 billion yen (3rd layer).
In this way, in cases where insurance claims per earthquake, etc. exceed a certain amount,excess liabilities are shared by the relevant organizations. This is called the excess of the loss
reinsurance.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

18

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

Portion over
125.9 billion yen,
and up to266.1 billion yen

125.9

70.1

About 4.3

About 200.3

—

70.1

About 1,729.6

About 1,799.7

125.9

140.2

1,733.9

2,000.0

Claims paid

A person of burden

JER and Non-life
insurance companies
The government
Total

Portion over
266.1 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 2021
JER and non-life insurance companies save the risk premium of insurance premiums paid bypolicyholders as earthquake insurance risk reserves for the possible payment of earthquake
insurance claims while the government saves government reserves in the earthquake reinsurance special account under law. Additionally, it is necessary for all investment profits fromthese accumulated liability reserves to also be accumulated as liability reserves. In the eventthat an earthquake occurs and causes losses or damages, each of JER, non-life insurancecompanies and the government pays an insurance claim according to each liability as stipulated in the reinsurance scheme by withdrawing from reserves.
JER and Non-life insurance companies
The government

251.6 billion yen
1,964.5 billion yen

Total

2,216.1 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 2021 is approved by the Diet.

19

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

STATISTICS

Reinsurance claims paid in fiscal 2021
Reinsurance claims paid in fiscal 2021 amounted to 290.3 billion yen, including reinsurance
claims paid to cover the earthquake centered in Fukushima Prefecture’s offshore area. In
terms of numbers, 300,171 claims were paid (on the basis of insurance policies). See below
for claims paid for major earthquakes, etc.
Date of occurrence

Magnitude

No. ofpolicies

Reinsurance
claims paid
(million yen)

1. Fukushima-ken-oki

February 13, 2021

7.3

239,599

246,766

2. Miyagi-ken-oki

March 20, 2021

6.9

22,995

18,626

3. Miyagi-ken-oki

May 1, 2021

6.8

10,5087,808

4. C hiba-ken Hokuseibu

October 7, 2021

5.9

10,9297,384

5. T he 2018 Northern Osaka

3,551

Earthquake(Region name)

June 18, 2018

6.1

5,744

Other earthquakes——

10,396

6,197

Total

—

—

300,171

290,335

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

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

Percentage ofhouseholds withinsurance (B/A)(%)

Probability that an
earthquake could occur
within the next 30 years

Great Kanto

23,094

8,125

35.2

Nearly 0%–6%Tokyo metropolitan

22,729

7,995

35.2

About 70%

Nankai trough48,066

16,902

35.2

70%–80%Earthquake(Region name)Note 1: JER prepared the number of households and the number of policies, assuming that major prefectures werestricken.
2: The probability that an earthquake could occur within the next 30 years is based on the 2021 version of the
National Seismic Hazard Maps for Japan of the Headquarters for Earthquake Research Promotion of theJapanese government. The probability of a Great Kanto Earthquake is that of a magnitude 8 earthquake along
the Sagami Trough. The probability of an inland earthquake in Tokyo metropolitan area is that of a magnitude
7 earthquake to be caused by a sinking plate along the Sagami Trough.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

20

Top 20 earthquakes as to reinsurance claims paid
See the table below for the top 20 earthquakes with respect to reinsurance claims paid since
the earthquake insurance system was established.
(As of March 31, 2022)
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

825,637

1,289,128

2. The 2016 Kumamoto

April 14, 2016

7.3

215,208

390,612

3. Fukushima-ken-oki

February 13, 2021

7.3

239,599

246,766

June 18, 2018

6.1

158,148

124,168

5. Hyogo-ken Nanbu

January 17, 1995

7.3

65,42778,346

6. The 2018 Hokkaido Eastern
Iburi

September 6, 2018

6.7

73,04153,181

7. Miyagi-ken-oki

April 7, 2011

7.2

31,01832,414

8. Miyagi-ken-oki

March 20, 2021

6.9

22,995

18,626

9. Fukuoka-ken Seiho-oki

March 20, 2005

7.0

22,066

16,973

10.Geiyo

March 24, 2001

6.7

24,453

16,942

11.Niigata-ken Chuetsu

October 23, 2004

6.8

12,61014,898

12. Niigata-ken Chuetsu-oki

July 16, 2007

6.8

7,873

8,251

13. Miyagi-ken-oki

May 1, 2021

6.8

10,508

7,808

14. C
 hiba-ken Hokuseibu

October 7, 2021

5.9

10,9297,384

15. Fukuoka-ken Seiho-oki

April 20, 2005

5.8

11,3386,430

September 26, 2003

8.0

10,553

5,990

17. Tottori-ken Chubu

October 21, 2016

6.6

7,255

5,614

18. Iwate-Miyagi Nairiku

June 14, 2008

7.2

8,276

5,545

19. Suruga-wan

August 11, 2009

6.5

9,552

5,194

20. Shizuoka-ken Tobu

March 15, 2011

6.4

5,472

4,763

4. The 2018 Northern Osaka

16. Tokachi-oki

Note 1: After the 2011 off the Pacific coast of Tohoku, in accordance with our reinsurance scheme at the time, thegovernment paid 587,064 million yen and JER and non-life insurance companies paid 702,064 million yen.
2: After the 2016 Kumamoto Earthquake, in accordance with our reinsurance scheme at the time, the government
paid 137,656 million yen and JER and non-life insurance companies paid 252,956 million yen.
3: After the 2018 Northern Osaka Earthquake, in accordance with our reinsurance scheme at the time, the government paid 17,884 million yen and JER and non-life insurance companies paid 106,284 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.

21

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

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.*

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

18. Iwate-Miyagi Nairiku (M7.2)

11. Niigata-ken Chuetsu (M6.8)

16. Tokachi-oki (M8.0)

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

12. Niigata-ken Chuetsu-oki (M6.8)
19. Suruga-wan (M6.5)

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

17. Tottori-ken Chubu (M6.6)

13. Miyagi-ken-oki (M6.8)
9. Fukuoka-ken Seiho-oki (M7.0)
3. Fukushima-ken (M7.3)

15. 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%

14. Chiba-ken Hokuseibu (M5.9)
20. Shizuoka-ken Tobu (M6.4)
Nankai Trough earthquake (about M8 – 9) 70% to 80%
10. Geiyo (M6.7)
4. The 2018 Northern Osaka (M6.1)
5. Hyogo-ken Nanbu (M7.3)

2. The 2016 Kumamoto (M7.3)* The epicenter areas for the Sagami Trough and the Nankai Trough in the above diagram are shown as the possible largest areas.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

22

SUSTAINABILITY

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

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

Promotingunderstanding ofearthquake insurance

Establishinga prompt payment
system in the event of
a complex disaster

Increasing in theearthquake insurance
take-up ratio

Rapidly rebuilding the lives ofdisaster victims

23Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

Providing information
useful for disasterprevention andmitigation

Encouraging ofdisaster prevention
and mitigation efforts

ESG Investment
Based on its public nature as an earthquake reinsurance company, JER is
engaged in ESG investment to provide funds to companies and businesses
with superior records in the environment and society, aiming to both generate investment income and address social issues. In selecting investee
companies, JER will make a comprehensive judgment based not only on
financial information but also on a company’s ESG initiatives, including its
response to environmental and social issues. JER is also committed to promoting ESG initiatives among its portfolio companies through constructive dialogue.
The table below shows the results of investments in SDG bonds (bonds that comply with theInternational Capital Markets Association’s (ICMA) Green Bond Principles, Social Bond Principles, Sustainability Bond Guidelines, Sustainability Linked Bond Principles, and Climate
Transition Finance Handbook, and are allocated to projects that contribute to the realizationof the SDGs) in fiscal 2021.
Green Bonds

5

4.0 billion yen

Social Bonds

23

21.4 billion yen

Sustainability Bonds

7

3.8 billion yen

Sustainability Linked Bonds2

1.9 billion yen

Total

37

31.1 billion yen

SOCIALENVIRONMENT

Contributing
to a prosperous
society throughESG investments

GOVERNANCE

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

24

Promoting Diversity and Inclusion
JER actively promotes diversity and inclusion so that employees with diverse
values can make the most of their individuality and fulfill their potential.
JER is focusing its activities on women and seniors in particular in its midterm management plan starting from FY2021.
In July 2022, JER received Eruboshi certification from the Minister of Health, Labor and Welfare as an employer with an excellent track record ininitiatives for the promotion of women’s activities. This certification is based on the
Act on Promotion of Women’s Participation and Advancement in the Workplace andrecognizes companies that meet certain standards and are making excellent efforts to promote the active role of women in their workplaces. JER met all criteria in five evaluation categories (“Recruitment,” “Continuous Employment,” “Working Hours and Other Work Styles,”“Management Ratio,” and “Diverse Career Courses”) and received a 3-star certification, thehighest rank of Eruboshi rank.
JER will continue to actively work to create an environment in which all employees can fully
demonstrate their abilities, and to enable them to work with enthusiasm and fulfillment.
* The Japanese words in the logo express the meaning of “Women are playing an active role in the company.”

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

25

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

Contributing to Local Communities and Society
In December 2020, JER received an award from Chuo Ward for its daily
greening activities in the community. JER also donates used stamps andprepaid cards collected in-house to the Chuo City Social Welfare Council.
The used stamps and prepaid cards are used to fund volunteer activities in the ward.
JER provides up to one month of volunteer leave to support employees’ social contribution
activities. JER also requires employees to obtain an Advanced First Aid
certification from the Tokyo Disaster Prevention & Emergency Medical
Service Association at the time of joining the company, which is useful inproviding first aid to the injured in the event of a disaster.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

26

Financial Section

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

27

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

FINANCIAL STATEMENTS
1. Balance Sheets(NET ASSETS)

(ASSETS)

(Yen in millions)Fiscal Year2020
(As of March
31, 2021)

2021(As of March
31, 2022)

Item

AmountAmountCash and deposits
Deposits

263,355
263,355

193,688
193,688

105

42

Call loans
Monetary receivables bought

19,99917,999365,834
16,68773,774
249,705
24,735931

457,705
25,89895,870303,916
32,020–

Tangible fixed assets
Buildings Other tangible fixed assets

52
20
31

46
20
26

Intangible fixed assets
Software Other intangible fixed assets

114
112
1

89
87
1

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

17,812
17,530322745
519,44919,0905236
4571

Total assets

667,273

689,022

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

Item

2020
(As of March
31, 2021)

2021(As of March
31, 2022)

AmountAmountUnderwriting funds
Outstanding claims
Underwriting reserves

631,956
118,581
513,374

664,942
144,276
520,665

Entrusted reserves

25,962

16,748Other liabilities
Reinsurance accounts payable
Income taxes payable
Deposits payable
Accrued amounts payable
Derivatives

6,690
5,004
457
3
239
986

7,434
5,227
371
3
484
1,346
128

Reserve for retirement benefits

151

Reserve for directors’ retirement benefits

10

7

Reserve for bonus payments

23

22

Reserves under the special law
Reserve for price fluctuation

0
0

0
0

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

939(1,792)665,734

687,492(Yen in millions)2020(As of March
31, 2021)

2021(As of March
31, 2022)

Item

AmountAmountCommon stock

1,000

1,000

546

547

Fiscal Year

Retained earnings Legal reserve of retained earnings

11 Other legal reserve of retained earnings

545

546

  
Special reserves

1717  Special price fluctuation reserves3939  Retained earnings carried forward

488

489

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

(5)

(5)

1,540

1,541

(1)

(12)

(1)

(12)

1,538

1,529

667,273

689,022

Notes for fiscal 2021
1. Matters relating to accounting policies are as follows.
(1)	Appraisal standards and method of securities
and method of indication are as follows.
(i)	Available-for-sale securities are appraised according to the market price at term end.
(ii)	With respect to the unrealized gain of assets
corresponding to the underwriting reserves andentrusted reserves of earthquake insurance, theamount before tax effect deduction is shownas Net unrealized gains on other securities ofearthquake insurance in Liabilities on the form
attached to the Enforcement Rules of Insurance
Business Act. For other unrealized gains, theamount after tax effect deduction is processed
entirely according to the direct capital injection
method and indicated in Shareholders’ Equity.
The calculation of the sales price is based on
the moving average method.
(2) The appraisal of derivatives is done on the basisof market price.
(3) Although depreciation of tangible fixed assets
is calculated using the declining balance method, buildings (excluding equipment attached tobuildings) that were acquired on or after April 1,
1998 and equipment attached to buildings andstructures that were acquired on or after April
1, 2016 were depreciated using the straight-line
method.
(4) Software for in-house use that is recorded as
an intangible fixed asset is amortized using thestraight-line method over the estimated usable
life (five years).

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

28

(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.

reinsurance with the government. Premiums written is recorded when reports on earthquake reinsurance premiums are received, and insurance
premiums recognized to have been ceded to nonlife insurance companies and the government arerecorded as reinsurance premiums ceded.
Moreover, claims paid are recorded when statements of earthquake reinsurance claims arereceived, and insurance claims recognized tobe recoverable by non-life insurance companies
and the government are recorded as reinsurance
claims recovered.
(12) The aggregate amount for the total amount ofoutstanding claims reported by non-life insurancecompanies and amounts of claims from non-life
insurance companies which is processed but un-	settled are recorded as outstanding claims.
The portion of outstanding claims equivalent to
the portion covered by reinsurance in accordancewith Article 73, Paragraph 3 of the Insurance
Business Act is not recorded.
(Changes in accounting policies)
We have applied “Accounting Standard for Fair
Value Measurement” (ASBJ Statement No. 30,
July 4, 2019) and others from the beginning of
the fiscal year 2021.
In accordance with the transitional treatment set
forth in Paragraph 19 of “Accounting Standard
for Fair Value Measurement” and Paragraph 44-2
of “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019),
the Company has prospectively applied a new accounting policy prescribed by “Accounting Standard for Fair Value Measurement” and others.
There is no effect on the financial statements.

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

29

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

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

(2)and manage current quotations and credit information on a regular basis in this regard.
Fair value of financial instruments and breakdown by input revel
The following table presents the amounts shownon the balance sheet and fair value breakdown
by input level as of March 31, 2022. Cash anddeposits, call loans, and monetary receivables
are omitted because they are settled in a shortperiod of time and their fair values are similar totheir book values.
The fair value of financial instruments are classified into the following three levels based on theobservability and materiality of the inputs usedin the fair value calculation:
Level 1: Fair value measured by the market
price of the asset or liability in active markets
among the observable inputs
Level 2: Fair value measured by the observable
inputs other than the Level 1 inputs
Level 3: Fair value measured by unobservable
inputsIf multiple inputs are used with a significant impact on the fair value measurement, the fair value
measurement is categorized in its entirety in thesame level of the fair value hierarchy as the lowest level input.
Financial instruments recorded at fair value on
the balance sheet(Yen in millions)Category

Balance sheet amount
Level 1

Level 2

Level 3

Total

Available-for-sale securities–

457,705–

457,705

Government bonds–

25,898–25,898Municipal bonds–

95,870–95,870

Corporate bonds–

303,916–

303,916

Foreign securities–

32,020–32,020Derivatives (*)
Derivatives not subject tohedge accounting–(1,346)–(1,346)–(1,346)–(1,346)

Securities

Foreign currency–(*) Derivative assets and liabilities arising from derivative transactions included in Other
assets and Other liabilities are presented on a net basis. Net debts are shown inparentheses.

Note 1: Description of the valuation techniques and inputs used in the fairvalue measurement
Securities
The fair value of securities which is based on the Reference Statistical Prices of Japan Securities Dealers Association and prices
provided by external vendors is categorized within level 2 based onmarket activity.
Derivatives
Since derivatives are OTC derivatives and no public prices are available, the fair value is measured using discounted cash flow analysis
according to the type of transaction and the remaining maturity. The

main inputs used in the valuation technique are interest rates andexchange rates. Fair value that can be measured without using unobservable inputs or that has little impact is categorized within level 2.

3. Taxes are included when preparing accounts for
consumption tax and other items.
4. Risk reserves contained in Underwriting reserves
have been deposited based on instructions for the
calculation of underwriting reserves by accumulating the amounts that result from subtracting anamount equivalent to corporate taxes from the net
premiums written and profit from operating the assets.
5. The accumulated depreciation of tangible fixed assets is 184 million yen and the advanced depreciation of tangible fixed assets is 2 million yen.
6. See below for a breakdown of outstanding claims.
(Yen in millions)

Outstanding claims (before the deduction ofoutstanding reinsurance claims)
Outstanding reinsurance claims related to theabove claims
Net outstanding claims

153,243
8,966
144,276

7. Total deferred tax assets amount to 2,447 million
yen. Deferred tax assets are all deducted from thetotal amount for a valuation reserve.
A breakdown of deferred tax assets reveals tax loss
carried forward of 2,295 million yen, unpaid business taxes of 81 million yen, a reserve for retirement
benefits of 36 million yen and unpaid special business tax of 22 million yen.
The major factor behind the significant change inamount for a valuation reserve is the 1,738 million
yen increase in the valuation allowance for tax loss
carried forward.
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 769.30 yen. The basis forthis calculation is that net assets are 1,529 million
yen, net assets accrued from ordinary shares are
1,529 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 202230

2. Statements of Income(Yen in millions)

Fiscal Year

2020

2021

Notes for fiscal 2021
1. See below for a breakdown of net premiums written.
(Yen in millions)(from April 1, 2020
to March 31, 2021)(from April 1, 2021
to March 31, 2022)

Item

AmountAmountReinsurance premiums ceded:

76,619Ordinary income

234,352

254,971

Net premiums written:

252,468

Underwriting income

233,000

252,930   Net premiums written

232,822

252,468177

462  Investment income on savings
premiums
Investment income

1,339

2,040

   Interest and dividend income

752

594

   Gains on sales of securities

96

144

   Foreign exchange gains

667

1,763

   Other investment income

0

0

(177)

(462)

  Transfer of investment income on
savings premiums
Other ordinary income

12–234,351

254,970

231,610

251,456

10,187150,088   Loss adjustment expenses

2,338

13,270  Commissions and brokerage fees

57,235  
Provision of outstanding claims   Provision of underwriting reserves

Ordinary expenses
Underwriting expenses   Net claims paid

Investment expenses

Premiums written:

329,088

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

Claims paid:

290,335

Reinsurance claims recovered:

140,247

Net claims paid:

150,088

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

Provision of outstanding claims(before the deduction of outstanding
reinsurance claims)(9,077)

55,111

Provision of outstanding reinsurance claims
related to the above claims(34,773)

114,948

25,695

Net provision of outstanding claims

25,69546,900

7,291

1,006

1,662

   Losses on sales of securities

69

207

  Losses on derivatives

922

1,439

   Other investment expenses

15

15

1,733

1,828

–

22

Monetary receivables bought:  Interest expenses–

22

Securities:

584

Ordinary income (loss)

01

Total:

594

Extraordinary income–2 Operating, general and administrative
expenses
Other ordinary expenses

Other extraordinary income

–

2

0

2

Provision of reserve for price fluctuation

0

0

Other extraordinary losses–

2

Net income (loss) before income taxes

01

Income taxes

00

Total income taxes00

Net income (loss)

01

Extraordinary losses

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

Deposits:

8

Call loans:

02

5. Paper profit/loss involved in the losses on derivatives
is a loss of 1,346 million yen.
6. Net
income per share is 0.75 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 16.24%. The difference is
explained by the following breakdown: valuation reserve 95,587.74%, exclusion from gross revenue ofreversal of taxable risk reserves related to claims
paid etc. (89,504.57%), and exclusion from grossrevenue of reversal of taxable risk reserves related
to publicity expenses (6,116.54%).
8. Each amount is rounded down to the nearest whole
unit.

31

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

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

Fiscal Year

Item

2020

2021

(from April 1, 2020
to March 31, 2021)(from April 1, 2021
to March 31, 2022)

AmountAmountNotes for fiscal 2021
1. 
Relationship of cash and cash equivalents at theend of the year with the amounts mentioned in therelevant balance sheet item.
(Yen in millions)

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

01

Depreciation

78

74

114,948

25,695

Increase (decrease) in outstanding
claimsCash and deposits
Call loans(As of March
31, 2021)(As of March
31, 2022)

263,355

193,688

105

42

Monetary receivables bought

19,99917,999Securities

365,834

457,705

Deposits of a depository period
over three months

Increase (decrease) in underwriting
reserves

46,900

7,291

Increase (decrease) in entrusted
reserves

911(9,214)(79,030)(79,030)

Increase (decrease) in reserve forretirement benefits

(12)

(22)

Monetary receivables bought other thancash equivalents(4,999)(7,999)

Increase (decrease) in reserve fordirectors’ retirement benefits

(3)

(2)

Securities other than cash equivalent(365,834)(457,705)

Cash and cash equivalents

199,430

124,700

Increase (decrease) in reserve forbonus payments

0(0)Increase (decrease) in reserve forprice fluctuation

0

0

(752)

(594)

Interest and dividend income
Losses (gains) on investment insecurities

(27)

62

Foreign exchange losses (gains)(1,132)(1,711)

Decrease (increase) in other assets(other than investment and financial
activities related)(10)(1,627)

Increase (decrease) in other liabilities(other than investment and financial
activities related)(7,548)468

Others1,086

274   Subtotal

154,439

20,695

1,347

1,319

Interest and dividends received
Income taxes paid

(0)

(0)

155,787

22,014

Net increase (decrease) in deposits(65,030)–

Purchase of monetary receivablesbought(19,997)(22,998)

Net cash provided by operating activities

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

Cash flow from investing activities

Proceeds from sales and redemptionof monetary receivables bought
Purchase of securities

24,99819,999(199,266)(187,139)

Proceeds from sales and redemptionof securities

84,96293,440    Total investment assets activities(174,333)(96,699)    Total operating activities and   investment assets activities(18,546)(74,685)

Acquisition of tangible fixed assets

(0)

(7)

Others(34)(36)(174,369)(96,744)

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(18,582)(74,729)

Cash and cash equivalents at the
beginning of the year

218,012

199,430

Cash and cash equivalents at the endof the year

199,430

124,700

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

32

4. Statement of Changes in Shareholders’ Equity
Fiscal 2020 (from April 1, 2020 to March 31, 2021)(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

0

0

Treasury
stock

(5)

Total
shareholders’equity

1,540

Net
Total
unrealized
valuation
gains onandavailabletranslation
for-saleadjustments
securities

(2)

(2)

Total net
assets1,537

Changes during
the period
Net income(loss)

0

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

1,000

1

17

39

0

0

488

546

(5)

0

0

0

0

0

0

0

0

1,540

(1)

(1)

1,538

Fiscal 2021 (from April 1, 2021 to March 31, 2022)(Yen in millions)

Valuation andtranslation adjustments

Shareholder’s equity
Retained earnings
Commonstock

Legalreserve ofretainedearnings

1,000

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

Specialreserves

Specialprice
fluctuation
reserves

Retainedearnings
carriedforward

17

39

488

546

1

1

Treasury
stock

(5)

Total
shareholders’equity

1,540

Net
Total
unrealized
valuation
gains onandavailabletranslation
for-saleadjustments
securities

(1)

(1)

Total net
assets1,538

Changes during
the period
Net income(loss)

1

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

1,000

1

17

39

1

1

489

547

Notes for fiscal 2021
1. Matters related to the types and total number ofstocks outstanding and the types and number oftreasury stock(Stock)Issuedstock
Treasurystock

Balance asof the endof fiscal
2020

Increase in
fiscal 2021

Decrease in
fiscal 2021

Balance asof the endof fiscal
2021

Ordinary stock

2,000,000––

2,000,000

Total

2,000,000––

2,000,000

Ordinary stock

11,400––11,400Total

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

33

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2022

(5)

1

(10)

(10)

(10)

1

(10)

(10)

(8)

1,541

(12)

(12)

1,529

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

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

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

We focus on liquidity and safety in asset management.

CORPORATE DATA (as of March 31, 2022)
Established:

May 30, 1966

Capital:1 billion yen

Total assets:

689.0 billion yen

Address:

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

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

URL:

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

2022
Annual Report
Introduction to Earthquake Reinsurance in Japan