55

ry

th
sa

YEARS

A niver

2021
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, 2021)
Established:

May 30, 1966

Capital:1 billion yen

Total assets:

667.2 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/

Contents

1

Message from the President

2Japan Earthquake Reinsurance Co., Ltd.

5

Topics6

Earthquake Insurance in Japan

14

Reinsurance of Earthquake Insurance

18

Statistics

21

Financial Section

28

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 the victims of disasters, including theearthquakes off the coast of Fukushima Prefecture and Miyagi Prefecture.
Fiscal 2020 will be remembered for the COVID-19 pandemic which has changed everyone’s
lives. Even in this challenging situation we were able to continue our key duties such as
reinsurance payouts in a hybrid working style.
55 years have passed since the earthquake insurance system was established, Japan
Earthquake Reinsurance Co., Ltd. (“JER”), the only reinsurance company in Japan specializing
in household earthquake insurance, has held to its management philosophy and management policy, and continue to work to realize them.
JER has been promptly and reliably processing reinsurance payouts, its key mission, in
the aftermath of disasters such as the 2011 Great East Japan Earthquake and the 2016
Kumamoto earthquakes.
Japan’s earthquake reinsurance scheme is unique in the world. It was established as acollaboration between the Japanese government, private non-life insurance companies andJER.
We began our 6th Medium-Term Management Plan in FY2021.
The medium-term management plan includes four strategies (the earthquake insurance
system, the asset management system, the emergency response system, and the systemfor preparing for disasters) based on sophisticated management and the promotion of SDGs
management.
We also work to execute human resource strategies and digitally transform (DX).
In addition to heralding our plan, JER adopted their 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 our first steps toward even more rapid pro-gress over the next three
years or so to achieve our vision.
I am committed to continuing our efforts to execute our duties with the support of all of ouremployees. We aim to be a company that earns the respect of our stakeholders.
July 2021

Shoji Ito
President
Japan Earthquake Reinsurance Co., Ltd.

1

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2021

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, 2021)
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 2021

2

SHAREHOLDERS(As of March 31, 2021)
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, 2021)

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 2021

MANAGEMENT INFORMATION
JER has prepared its 6th Medium-Term Management Plan spanning the three years startingin 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 2021

4

TOPICSTHE EARTHQUAKE INSURANCE SYSTEM
AND JER’S 55TH ANNIVERSARYOn June 1, 2021, JER celebrated its 55th anniversary.
The establishment of an earthquake insurance was planned in response to the Niigata Earthquake that occurred in 1964. The Act on Earthquake Insurance was passed and came into
force on May 18, 1966, followed by the establishment of the earthquake reinsurance scheme
under which the government acts as the underwriter of reinsurance based on public-private
sector cooperation.
During JER’s history of handling earthquake insurance over the last 55 years, Japan has been
hit by many earthquakes and volcanic eruptions, including the 1978 earthquakes off the coastof Miyagi Prefecture, the 1991 eruption of Mt Unzen’s Fugendake, the 1995 Great HanshinAwaji Earthquake, the 2000 eruptions of Mt Usu and Miyakejima and the 2011 Great East
Japan Earthquake.
In 2016, when JER celebrated its 50th anniversary, the Kumamoto earthquakes occurred.
Since then, there have been a series of natural disasters around the nation, such as the northern Osaka earthquakes and the Hokkaido Eastern Iburi earthquakes.
Moreover, we are facing in recent years intensifying windstorms and floods due to climatechange, as well as the COVID-19 pandemic since 2020. Amid these circumstances, earthquakes off the coast of Fukushima Prefecture occurred in February 2021, mainly affecting
the Tohoku District. As such, there have been complex disaster events comprising COVID-19,
windstorms, floods and earthquakes.
In this environment, JER will strive to continue to disseminate earthquake insurance andenhance the earthquake insurance system that ensures prompt and accurate reinsurance
payouts, to fulfill its mission of helping people in Japan.
<Major earthquakes in recent years>• 2016 Kumamoto earthquakes• 2018 earthquakes centered in northern Osaka• 2018 Hokkaido Eastern Iburi earthquakes• 2021 earthquakes centered on Fukushima Prefecture’s offshore area
• 2021 earthquakes centered on Miyagi Prefecture’s offshore area
<Trends in earthquake insurance in recent years>• Revision of earthquake insurance premium rate and review of product content■Revision of earthquake insurance premium rate on January 1, 2017 and creation of fourdamage categories■Revision of earthquake insurance premium rate on January 1, 2019
■Revision of earthquake insurance premium rate on January 1, 2021
• Revision of upper limit for total amount of insurance claims (revised in April 2021)
The upper limit for total amount of insurance claims for one earthquake, etc. was increased
from 11,700 billion yen to 12,000 billion yen. The apportionment of the burden between the
public and private sectors are 11,775.1 billion yen for the government and 224.9 billion yen
for the private insurance companies.
• Regarding measures to recover the balance of the private sector policy reserve, the methodof allocation of insurance premiums was temporarily changed in the government budget for
fiscal 2020 as a measure to recover the balance of the private sector policy reserve, which
had decreased due to earthquake disasters in recent years, with an eye to steady management of the earthquake insurance system, under which the government and private insurance companies are co-insurers.

5Japan Earthquake Reinsurance Co., Ltd. Annual Report 2021

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 2021

6

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.

7

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2021

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.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2021

8

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.

9Japan Earthquake Reinsurance Co., Ltd. Annual Report 2021

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 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.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2021

10

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

11

PrefectureNonwoodenWoodenHokkai-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, Kagoshima-ken

7,400

12,300Fukushima-ken

9,700

19,500Miyagi-ken, Yamanashi-ken, Aichi-ken, Mie-ken, Osaka-fu, Wakayama-ken,
Kagawa-ken, Ehime-ken, Oita-ken, Miyazaki-ken, Okinawa-ken

11,80021,200Ibaraki-ken

17,70036,600Saitama-ken

20,40036,600Tokushima-ken, Kochi-ken

17,70041,800Chiba-ken, Tokyo-to, Kanagawa-ken, Shizuoka-ken

27,50042,200Japan Earthquake Reinsurance Co., Ltd. Annual Report 2021

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 2021

12

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

4.65

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→ 2.04 (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

2.04

x

(100%

(1,000 yen)

5,000

–

10%)

=

18,400 (yen)=9,200 (yen)

1.84

Earthquake
amount insured=

Discount rate

Earthquake insurance
premium rate

x

2.04

(1,000 yen)x

Discount rate

(100%

–

10%)

1.84

*
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.

13

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2021

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 2021

14

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)

15

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 2021

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)

Small

Amount of damage per earthquake, etc.

Large

(Payable insurance claims)
Up to125.9 billion yen

70.1 billion

Up to266.1 billion yen

12 trillion yen

50%

125.9
billion

11,705.0 billion
70.1 billion

50%
28.9 billion

1st layer

Approx. 99.8%

2nd layer

Approx. 0.2%

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 2021

16

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 2020
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

239.8 billion yen
21.0 billion yen
1,990.9 billion yen

Total

2,251.7 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 2020 is approved by the Diet.

17

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2021

STATISTICS

Reinsurance claims paid in fiscal 2020
Reinsurance claims paid in fiscal 2020 amounted to 14.1 billion yen, including reinsurance
claims paid to cover the earthquakes centered in northern Osaka and the 2018 Hokkaido
Eastern Iburi earthquakes. In terms of numbers, 21,332 claims were paid (on the basis of
insurance policies). See below for claims paid for major earthquakes, etc.
Earthquake(Region name)
1. The 2018 Northern Osaka
2. The 2018 Hokkaido Eastern Iburi

Date of occurrence

Magnitude

No. ofpolicies

June 18, 2018

6.1

6,740

Reinsurance
claims paid
(million yen)
4,399

September 6, 2018

6.7

3,867

2,286

3. The 2011 off the Pacific coast of Tohoku

March 11, 2011

9.0

2,844

1,950

4. The 2016 Kumamoto

April 14, 2016

7.3

1,687

1,502

5. E
 arthquakes centered in Yamagata
Prefecture’s offshore area

June 18, 2019

6.7

838

506

Other earthquakes

—

—

5,356

3,467

Total

—

—

21,332

14,114The 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

22,880

7,914

34.6

Nearly 0%–6%Tokyo metropolitan

19,221

6,803

35.4

About 70%

Nankai trough47,695

16,40534.4

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, 2020).
2: JER prepared the number of policies, assuming that major prefectures were stricken, based on the preliminary
figures as of the end of 2019 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 2020 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.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2021

18

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, 2021)
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

824,049

1,288,103

2. The 2016 Kumamoto

April 14, 2016

7.3

214,003389,811

3. The 2018 Northern Osaka

June 18, 20186.1

152,404

120,616

4. Hyogo-ken Nanbu

January 17, 1995

7.3

65,42778,346

5. The 2018 Hokkaido Eastern
Iburi

September 6, 2018

6.7

70,36051,7306. Miyagi-ken-oki

April 7, 2011

7.2

31,01932,414

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

12,60914,897

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. Tottori-ken Chubu

October 21, 2016

6.6

7,210

5,583

14. Iwate-Miyagi Nairiku

June 14, 2008

7.2

8,276

5,545

15. Suruga-wan

August 11, 2009

6.5

9,549

5,192

16. Shizuoka-ken Tobu

March 15, 2011

6.4

5,464

4,755

17. Iwate-ken Engan Hokubu

July 24, 2008

6.8

7,756

3,973

18. Fukushima-ken Hamadori

April 11, 2011

7.0

2,386

3,685

19. Central Eastern Part of
Iburi

February 21, 2019

5.8

4,908

3,508

June 30, 2011

5.4

2,996

3,339

12. Tokachi-oki

20. Nagano-ken Chubu

Note 1: After the 2011 off the Pacific coast of Tohoku, in accordance with our reinsurance scheme at the time, thegovernment paid 586,551 million yen and JER and non-life insurance companies paid 701,551 million yen.
2: After the 2016 Kumamoto Earthquake, in accordance with our reinsurance scheme at the time, the government
paid 137,255 million yen and JER and non-life insurance companies paid 252,555 million yen.
3: After the 2018 Northern Osaka Earthquake, in accordance with our reinsurance scheme at the time, the government paid 16,108 million yen and JER and non-life insurance companies paid 104,508 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.

19

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2021

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)

19. Central Eastern Part of Iburi (M5.8)

10. Niigata-ken Chuetsu-oki (M6.8)

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

20. Nagano-ken Chubu (M5.4)

14. Iwate-Miyagi Nairiku (M7.2)

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

13. Tottori-ken Chubu (M6.6)

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)

15. Suruga-wan (M6.5)

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)* 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 2021

20

Financial Section

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

21

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2021

FINANCIAL STATEMENTS
1. Balance Sheets(NET ASSETS)

(ASSETS)

(Yen in millions)Fiscal Year2019
(As of March
31, 2020)

2020(As of March
31, 2021)

Item

AmountAmountCash and deposits
Deposits

231,608
231,608

263,355
263,355404

105

Call loans

9,999

19,999250,648
29,935
18,632
167,384
34,695–

365,834
16,68773,774
249,705
24,735
931

Tangible fixed assets
Buildings Other tangible fixed assets

66
22
44

52
20
31

Intangible fixed assets
Software Other intangible fixed assets

142
141
1

114
112
1

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

17,92817,517
2
227
45
9
125

17,812
17,530
3
227
45
5
–

Total assets

510,798

667,273

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

Item

2019
(As of March
31, 2020)

2020(As of March
31, 2021)

AmountAmountUnderwriting funds
Outstanding claims
Underwriting reserves

470,107
3,633
466,474

631,956
118,581
513,374

Entrusted reserves

25,05025,962Other liabilities
Reinsurance accounts payable
Income taxes payable
Deposits payable
Accrued amounts payable
Derivatives

13,27812,605
189
2
187
292

6,690
5,004
457
3
239
986

Reserve for retirement benefits

163

151

Reserve for directors’ retirement benefits

13

10

Reserve for bonus payments

23

23

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

623

939

509,261

665,734(Yen in millions)2019(As of March
31, 2020)

2020(As of March
31, 2021)

Item

AmountAmountCommon stock

1,000

1,000

545

546

Fiscal Year

Retained earnings Legal reserve of retained earnings Other legal reserve of retained earnings

1

1

544

545

  
Special reserves

1717  Special price fluctuation reserves3939  Retained earnings carried forward

487

488

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

1,540

(2)

(1)

(2)

(1)

1,537

1,538

510,798

667,273

Notes for fiscal 2020
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 2021

22

(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.

23(11) Reinsurance transactions are based on provisionsof earthquake reinsurance treaty concluded with
non-life insurance companies and excess of loss
reinsurance with the government. Premiums 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 unsettled are recorded as outstanding claims.
The portion of outstanding claims equivalent to
the portion covered by reinsurance in accordancewith Article 73, Paragraph 3 of the Insurance
Business Act is not recorded.
(Additional information)
We started to apply the Accounting Standard for
Accounting Changes and Error Corrections (ASBJ
Statement No. 24, March 31, 2020) to financial
statements as of the end of the fiscal year underreview. Accordingly, for reinsurance transactions
and outstanding claims, it started to disclose accounting policies and methods adopted in casethe related accounting standards are not clarified.
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.

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2021

(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, 2021.
(Yen in millions)

Balancesheet
amountFair value

Difference(i) Cash and deposits

263,355

263,355

–

105

105

–

(iii) Monetary receivablesbought19,99919,999–(iv) Securities
Available-for-sale securities

365,834

365,834–

Total assets(ii) Call loans

649,294649,294–(v) Derivatives* to which
hedge accounting is notapplied

(986)

(986)

–

Derivatives total

(986)

(986)

–

* 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.

7. Total deferred tax assets amount to 738 million yen.
Deferred tax assets are all deducted from the total
amount for a valuation reserve.
A breakdown of deferred tax assets reveals tax loss
carried forward of 557 million yen, unpaid businesstaxes of 102 million yen, a reserve for retirement
benefits of 42 million yen and unpaid special business tax of 25 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 773.77 yen. The basis forthis calculation is that net assets are 1,538 million
yen, net assets accrued from ordinary shares are
1,538 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.

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

Outstanding claims (before the deduction ofoutstanding reinsurance claims)

162,321

Outstanding reinsurance claims related to theabove claims

43,739Net outstanding claims

118,581

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2021

24

2. Statements of Income(Yen in millions)

Fiscal Year

2019

2020

Notes for fiscal 2020
1. See below for a breakdown of net premiums written.
(Yen in millions)(from April 1, 2019
to March 31, 2020)(from April 1, 2020
to March 31, 2021)

Item

AmountAmountReinsurance premiums ceded:

95,195

Ordinary income

138,413234,352

Net premiums written:

232,822

Underwriting income

137,376

233,000   Net premiums written

129,298

232,822

121

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

7,955

–

Investment income

1,028

1,339

   Interest and dividend income

872

752

   Gains on sales of securities

184

96

   Gains on derivatives

91–   Foreign exchange gains–

667   Other investment income  Transfer of investment income on
savings premiums
Other ordinary income
Ordinary expenses
Underwriting expenses   Net claims paid

1

0

(121)

(177)

(Yen in millions)

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

157,303

10,187

Provision of outstanding reinsurance claims
related to the above claims

42,355

Net provision of outstanding claims

114,948–

114,948

49,773

46,900

712

1,006

40

69

   Losses on derivatives–

922  Foreign exchange losses

660–   Other investment expenses

11

15

1,437

1,733

0

–

Ordinary profit (loss)(2)0

Extraordinary income

1–

Provision of reserve for price fluctuation

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

231,610   Losses on sales of securities

Reversal of reserve for price fluctuation

10,187

26,223

2,338

Extraordinary losses

3,926

Net claims paid:

136,265

57,235

Other ordinary expenses

14,114

Reinsurance claims recovered:

12

5,338

 Operating, general and administrative
expenses(Yen in millions)

Claims paid:

234,351

54,929Investment expenses

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

7  Commissions and brokerage fees   Provision of underwriting reserves

328,017

138,415   Loss adjustment expenses  Provision of outstanding claims

Premiums written:

1

–

–

0

–

0

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

00

Total income taxes00

Net income (loss)(1)0

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

Deposits:

8

Call loans:0

Monetary receivables bought:

2

Securities:

741

Total:

752

5. Paper profit/loss involved in the losses on derivatives
is a loss of 986 million yen.
6. Net
income per share is 0.17 yen.
The basis for this calculation is such that net income is 0 million yen, net income accrued from
common stocks is 0 million yen and the term average number of common stocks amount to 1.988
million.
7. The legal effective tax rate at the end of the termis 28.00%, and the corporate tax burden after applying the tax effect is 46.67%. The difference is
explained by the following breakdown: valuation reserve 16,479.26%, the amount of the write-off carried from publicity expenses related to risk reserves(16,514.54%).
8. Each amount is rounded down to the nearest whole
unit.

25

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2021

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

Fiscal Year

Item

2019

2020

(from April 1, 2019
to March 31, 2020)(from April 1, 2020
to March 31, 2021)

AmountAmountNotes for fiscal 2020
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
Depreciation

(0)

0

96

78

Increase (decrease) in outstanding
claims(7,955)

114,948

Increase (decrease) in underwriting
reserves

49,773

Cash and deposits
Call loans(As of March
31, 2021)

231,608

263,355

404

105

9,999

19,999Securities

250,648

365,834(14,000)(79,030)

Monetary receivables bought
46,900(As of March
31, 2020)

Increase (decrease) in entrusted
reserves

1,291

911

Deposits of a depository period
over three months

Increase (decrease) in reserve forretirement benefits

11

(12)

Monetary receivables bought other thancash equivalents(9,999)(4,999)Securities other than cash equivalent(250,648)(365,834)

Cash and cash equivalents

218,012

199,430

Increase (decrease) in reserve fordirectors’ retirement benefits

(0)

(3)

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

0

Interest and dividend income

(872)

(752)

Losses (gains) on investment insecurities

(144)

(27)

Foreign exchange losses (gains)371(1,132)

Decrease (increase) in other assets(other than investment and financial
activities related)

(115)

(10)

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

220(7,548)Others156

1,086   Subtotal

42,830154,439

1,337

1,347

Interest and dividends received
Income taxes paid

(0)

(0)

44,167

155,787

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

Purchase of monetary receivablesbought(27,999)(19,997)

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

27,99924,998(123,665)(199,266)

Proceeds from sales and redemptionof securities

99,532

84,962    Total investment assets activities(24,132)(174,333)    Total operating activities and   investment assets activities

20,035(18,546)

Purchase of securities

Acquisition of tangible fixed assets

(2)

(0)

Others(3)(34)(24,139)(174,369)

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

20,028(18,582)

Cash and cash equivalents at the
beginning of the year

197,983

218,012

Cash and cash equivalents at the endof the year

218,012

199,430

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2021

26

4. Statement of Changes in Shareholders’ Equity
Fiscal 2019 (from April 1, 2019 to March 31, 2020)(Yen in millions)

Valuation andtranslation adjustments

Shareholder’s equity
Retained earnings
Commonstock

Legalreserve ofretainedearnings

1,000

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

Specialreserves

Specialprice
fluctuation
reserves

Retainedearnings
carriedforward

17

39

489

546

(1)

(1)

Treasury
stock

(5)

Total
shareholders’equity

1,541

Net
Total
unrealized
valuation
gains onandavailabletranslation
for-saleadjustments
securities

1

1

Total net
assets1,543

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)

487

545

(5)

(1)

(4)

(4)

(4)

(1)

(4)

(4)

(5)

1,540

(2)

(2)

1,537

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’equity0

Total changes
Balance at theend of the period

1,000

1

17

39

0

0

488

546

Notes for fiscal 2020
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
2019

Increase in
fiscal 2020

Decrease in
fiscal 2020

Balance asof the endof fiscal
2020

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.

27

0

Japan Earthquake Reinsurance Co., Ltd. Annual Report 2021

(5)

0

0

0

0

0

0

1,540

(1)

(1)

1,538

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, 2021)
Established:

May 30, 1966

Capital:1 billion yen

Total assets:

667.2 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/

55

ry

th
sa

YEARS

A niver

2021
Annual Report
Introduction to Earthquake Reinsurance in Japan