Japan’s
Insurance
Market2019

Japan’s Insurance Market 2019
ContentsPage

To Our Clients
Tomoatsu Noguchi
President and Chief Executive
The Toa Reinsurance Company, Limited

1

1. Disaster Risk in Megacities
U Hiroi
Associate Professor
Department of Urban Engineering, School of Engineering, the University of Tokyo2

2. Collaboration between (Re)insurance Companies and Local Governments toEnhance Urban Resilience
Tomo Sugiura
Chief Researcher, Research Dept.
The General Insurance Institute of Japan6

3. Putting Jebi’s Insured Losses in Context: A Look Back at Historic Japan Typhoons
Milan Simic, PhD
Executive Vice President and Managing Director, Global Business Development
Verisk Insurance

12

4. Trends in Japan’s Non-Life Insurance Industry
Underwriting & Planning Department
The Toa Reinsurance Company, Limited

20

5. Trends in Japan’s Life Insurance Industry
Life Underwriting & Planning Department
The Toa Reinsurance Company, Limited

28

Company Overview

34

Supplemental Data: Results of Japanese Major Non-Life Insurance Companies
for Fiscal 2018, Ended March 31, 2019 (Non-Consolidated Basis)

37©2019 The Toa Reinsurance Company, Limited. All rights reserved. The contents may be reproduced only with the written permission of
The Toa Reinsurance Company, Limited.

To Our Clients

It gives me great pleasure to have the opportunity to welcome you to our brochure, ‘Japan’s
Insurance Market 2019.’ It is encouraging to know that over the years our brochures have been wellreceived even beyond our own industry’s boundaries as a source of useful, up-to-date information about
Japan’s insurance market, as well as contributing to a wider interest in and understanding of ourdomestic market.
During fiscal 2018, the year ended March 31, 2019, the world economy generally remained on amoderate recovery track, as the U.S. economy grew steadily while China and other emerging economies
continued to experience stable growth. However, in the second half of fiscal 2018, concerns about theeconomic outlook became widespread against the backdrop of the intensifying U.S.-China trade
friction and political issues in Europe.
Overall, the moderate recovery of the Japanese economy continued. Despite the impact of a seriesof large-scale natural disasters such as earthquakes and typhoons, capital investment continued trending
upward while corporate earnings improved, and personal consumption picked up too, reflecting an
improvement in the employment and income environment.
In the reinsurance industry, the trend toward softening of reinsurance premium rates andconditions, which has been evident in recent years, halted to some extent, reflecting the frequent
occurrence of large-scale natural disasters. Nonetheless, market conditions remained competitive, given
the abundant capacity of the reinsurance market.
Going forward, the business environment is expected to remain challenging in view of fierce
competition to win contracts in the reinsurance market, frequent occurrence of natural disasters, andthe need to respond to climate change, the increasing complexity of risks, and strengthened
international regulations and frameworks.
In accordance with the “Mission 2020” medium-term management plan, the Group will provide
clients with higher quality reinsurance solutions and value-added services while further strengthening
the management foundation to deal with future issues, in order to achieve sustainable growth.
Everyone at the Toa Re Group will do their utmost so that the Group can fulfill its mission as areinsurance company “Providing Peace of Mind,” as articulated in the Toa Re Mission Statement.
In conclusion, I hope that our brochure will provide a greater insight into the Japanese insurance
market and I would like to express my gratitude to all who kindly contributed so much time and effort
towards its making.

Tomoatsu Noguchi
President and Chief Executive
The Toa Reinsurance Company, Limited1

1.
1. Introduction

2

Disaster Risk in Megacities
U Hiroi
Associate Professor
Department of Urban Engineering, School of Engineering,
the University of Tokyo

Initiatives to make cities more resilient to disasters are generally known as urban
disaster prevention initiatives, and have been implemented in Japan since ancient
times because of the large number of wooden houses, housing density, and culturaland regional features including the high probability of earthquakes. In particular, as
the size and scale of cities has expanded in concert with increased political andeconomic concentration (accumulation), urban disaster prevention initiatives have also
become more numerous because vulnerability to accumulation issues has become
increasingly apparent. Recent large-scale disasters, including the 1959 Isewan Typhoon(Typhoon Vera), the 1995 Great Hanshin-Awaji Earthquake, and the 2011 Great East
Japan Earthquake have resulted in significant changes in disaster prevention policy.
Today, there is greater urgency to introduce policies and plans that meet Japan’s new
and diverse disaster prevention needs. One of these policies and plans is known as“Disaster Management 4.0,” which emphasizes the need for all citizens to consider
disaster management as a personal issue and to take individual responsibility inpreparing for disasters.
Incidentally, urban development that incorporates disaster prevention measures
may be characterized by three features that are necessary considerations. The first is“objectivity.” In many cases, there are physical and social mechanisms involved indisaster-related phenomena. Therefore, making our cities resilient to disasters requires
at least a minimum knowledge of disaster phenomena and human behavioral
principles. Without this knowledge, understanding uncertainty and reaching agreement
on tolerable levels of risk are especially difficult, as is formulating appropriate disasterprevention measures. The second feature is “diversity.” Disaster prevention must cover abroad range of measures because of the diverse concepts involved in factors such as thetypes of disaster, time scales, participants, and the purpose of the measures. Statedeuphemistically, there is a high degree of freedom to act; however, to be honest, most
governments and residents do not know which approaches will be effective for them. A
strategic perspective that considers an effective combination of solutions is therefore
essential. The third feature is “regional characteristics.” Disasters vary greatly due toregional characteristics, so what needs to be done for a given region also varies greatly.
In addition, in considering issues such as post-disaster recovery, desired urban outcomesvary significantly by region, so people have to draw out the latent power of each city toachieve the varied demands of each region. In other words, independent decisionmaking by the residents of the region is required.
This paper reconsiders disaster risk in megacities by examining the uniquecharacteristics of disaster prevention policies and measures in densely populated areas
where everything is concentrated, including people and wealth, with due regard forthe regional characteristics that are key to urban disaster prevention initiatives.

The Toa Reinsurance Company, Limited — Japan’s Insurance Market 2019

2. UniqueCharacteristics
of Disaster
Prevention in
Megacities

The United Nations Statistics Division defines a megacity to be an urban
agglomeration with more than 10 million inhabitants with a “population contained
within the contours of a contiguous territory inhabited at urban density levels
without regard to administrative boundaries,” and takes into account three criteria.
Twenty-one cities worldwide meet these criteria (35 cities meet at least one
criterion), and the largest megacity is Tokyo (34.7 million people using the UN
standard). Japan’s large metropolitan areas rank high among the world’s megacities
according to a Munich Reinsurance Company ranking of natural disaster risk
(hazard, vulnerability (loss susceptibility), and exposure). From the perspective of“exposure” due to accumulation of people, values and infrastructure, Tokyo, Osaka,
New York, Paris and London stand out among the world’s megacities.
Accumulation is the first thing to consider in devising disaster prevention plans
for megacities. Yet this very accumulation reflects positive synergy among the
economy, information and knowledge that in normal times is the greatest merit of amegacity. However, from the point of view of a disaster that has the potential tocause the most extensive damage, extreme accumulation in megacities means they
are subject to greater destruction efficiency than elsewhere, and the damage canaffect other regions in various ways. For example, the impact of collapse of dense
housing in a megacity is enormous compared to the collapse of a house in a field.
Such impact, a sort of “negative externality” represented by obstructed roads,
impediments to evacuation and post-earthquake fires, is not negligible. Japan has
been implementing relevant countermeasures during the modern era. The city ofEdo (old Tokyo) established open spaces, including open plazas around bridges, toimpede the spread of fire. During World War II, building evacuation and structural
technologies to protect against fire were developed. After the war, physical controls
to reduce damage included the introduction of fire breaks and non-combustible
roadways, and the creation of carefully planned open spaces. These measures weretaken because dangers related to high building concentration (that might lead to fire
propagation) and the over-concentration of evacuees were recognized.
Since the Great Hanshin-Awaji Earthquake, the government has been
complementing these external diseconomies that result from accumulation in ways
such as providing free diagnoses of earthquake resistance and assistance forearthquake-proofing for housing. Moreover, initiatives were launched after the Great
East Japan Earthquake in 2011 to control the return en masse of people who havebeen stranded due to mass transit disruptions. However, large modern cities involve
complex systems and sophisticated industrial structures, so the indirect economic
damage caused by disasters is extremely large, and the paralysis of central
management functions among key organizations including government, media andfinance can be expected to have negative ripple effects. This consequently affects theentire world as well as Japan, and slows the emergency response and the pace ofrecovery in megacities. In other words, when considering the disaster prevention
measures of large cities, the issues of decentralizing and multi-layering (redundancy)of the social functions of megacities (as represented by the function of Tokyo as thecapital of Japan) are just as important as controls on the physical phenomena

3

1. Disaster Risk in Megacities

associated with accumulation, including impediments to evacuation from thecollapse of buildings, the spread of fire, and evacuation behavior. As describedabove, megacities exhibit the characteristics of excessive population and structure
density, and they are also hubs that incorporate peripheral coordination and central
management functions relating to quantifying disaster risk and formulating relevant
countermeasures. Considering these issues, disaster prevention planning formegacities must therefore encompass not simply the security of local buildings andneighborhoods, but also the protection of lives, functions and social systems with awide-area perspective, along with post-disaster recovery and revitalization.
The second issue involves human factors represented by limited disaster
experience, lifeline dependence, and community collapse. Megacities in Japan havenot experienced a major disaster since 1945, the end of World War II, so the abilityof residents to respond to disasters in megacities where the sense of community
might collapse is likely to be quite low. The fact is that Tokyo only experienced amaximum seismic intensity in the upper 5 range when the Great East Japan
Earthquake occurred, but massive confusion resulted largely from the inability ofpeople to return home. Needless to say, people are dependent on urban amenities
including well-developed infrastructure. The infrastructure environment in normal
times encompasses everything from electricity, gas and water to distribution,
information and transportation, and efficiently meets all of the needs of theenormous daytime population, but could fail in any number of ways should adisaster occur. The same applies to government capabilities such as firefighting andemergency services. Further, the impact on information technology in particular haspresumably become increasingly significant in recent years. In situations involving
major disasters, social networks often problematically focused on false informationsuch as harmful substances in the rain following the Great East Japan Earthquake
and the escape of lions from zoos following the Kumamoto Earthquake. When there
is a breakdown in the balance between information supply and demand during adisaster, the rapid spread of questionable information involving speculation reflects
an attempt to ease the anxiety of residents. This raises the prospect of other issues
including behavioral breakdowns during evacuation, panic caused by information,and damage to the reputation of tourist destinations.
People who live for extended periods in large cities naturally come to enjoy
urban life and the advantages of access to ample information, and assume optimized
payments for all associated costs – however, it is misconception because such apromise is only valid under normal circumstances. Social systems that incorporate
redundancy are often deemed wasteful despite the assumption that disasters will
occur. Moreover, the prevalence of LPHC (low-probability, high-consequence) typedisaster risk makes investment in disaster prevention even more difficult. Rezoning,
redevelopment, investment in physical infrastructure, and easing of floor area ratio
regulations in the past to help enhance the safety of urban neighborhoods all seemless welcome today. Solving today’s problems using only planning theory premisedon disaster prevention principles and lackluster economic growth is therefore
difficult, so proposals for new planning techniques are expected, as is a newunderstanding of the concept of values.
4The Toa Reinsurance Company, Limited — Japan’s Insurance Market 2019

The final issue is the novelty of disaster risk. As mentioned above, no large cityin Japan has experienced a large-scale natural disaster since the 1923 Great Kanto
Earthquake, and it is difficult to picture the possible extent of damages. Complex
disaster risk is a representative potential problem. Japan’s megacities have a very highfire risk due to building density, and road closures due to the collapse of buildings
may disable evacuation routes and the movement of emergency vehicles. Economic
efficiency and other factors lead many people to live in places with high disaster risk,such as unstable ground, and tsunami risk is another concern depending on thelocation. These complex disasters that manifest themselves in multiple locations
inhibit usual evacuation behavior and processes, and many evacuees will likely be
confused about the timing of evacuation and evacuation destinations.
On the other hand, evacuation plans and measures for people who are having
difficulty returning home are often made separately for each disaster, but must coversuch diverse events as urban fires, tsunami, and flood. Due to lack of experience
with such complex disasters, planning for effective evacuation in the case of acomplex disaster is still inadequate. In addition, megacities contain many areas
undergoing rapid neighborhood renewal and change, and regulation may lag. As in
the case of the evacuation behavior from the complex disasters mentioned above, it
is particularly important to take a positive attitude about estimating risks that havenot been experienced and taking appropriate measures in such areas. Generally
speaking though, imagining novel disaster phenomena and estimating their damage
in advance is very difficult.

3. Conclusion

As mentioned above, this paper presents characteristics of disaster risk in megacities.
Disaster research involves the concept of the “dysfunction of experience,” in which pastexperience may actually increase the damage due to the region-specific features of thedisaster phenomena. In other words, we must take seriously the lessons learned from pastlarge-scale disasters, while enhancing the flexibility to predict and respond to the novel
phenomena of large-scale disasters in megacities by gaining sufficient understanding of
their region-specific nature. The smart city era is now approaching – it will utilize
information from sensors placed around the city and empower the use of various
privately held data such as mobile phone and POS data. In the past, complexity posed
challenges to complete understanding, modeling and control of large-scale disasters inmegacities. Now the application of popular deep learning and big data may play ameaningful role in terms of cross-pollinating the skill sets of experts in various fields andidentifying regularities that had been difficult for people to understand. Applying deeplearning and big data to proposing and implementing disaster planning will require
specialized expertise and elemental technologies.

52.

Collaboration between (Re)insurance
Companies and Local Governments
to Enhance Urban Resilience
Tomo Sugiura
Chief Researcher, Research Dept.
The General Insurance Institute of Japan* This is a translated summary (original in Japanese) of a paper entitled “Collaboration
between (Re)insurance Companies and Local Governments to Enhance Urban Resilience”
by Tomo Sugiura. It was originally presented in GIIJ Report Vol. 126 (General InsuranceInstitute of Japan, 2019.1).

1. Introduction

2. Collaboration
betweenInsurance
Companies and
Local
Governments

6

Urbanization is progressing rapidly worldwide. While urban residents
accounted for 30% of the total global population in 1950, this figure is expected toreach 55% in 2018 and 68% in 2050. Many cities are struggling to cope with thehigher population density and face problems such as dysfunctional infrastructure
and the aggravation of disaster risks. In calling for enhanced urban resilience in its
Sustainable Development Goals, the United Nations has also recognized theimportance of this issue. To address these problems, local governments need toformulate policies that are aligned with their own economic and social backgrounds,
geographical characteristics, developmental stages, risk factors, and so on.
Given that enhanced urban resilience is correlated with an increase in insurance
provision and investment opportunities, insurance companies, including reinsurancecompanies, can be key stakeholders in enhancing urban resilience. Through theirfunction as experts in risk management, underwriting, and risk transfer, and as
institutional investors, they can help resolve urban issues using a broad array ofknowledge and data. Conventionally, insurance companies and local governments
have cooperated primarily in post-disaster responses, but insurance companies haverarely participated in urban policy discussions from the initial study phase. In recent
years, however, growing awareness of the urgency of easing urban problems, and of
the mutual benefits that collaboration between local governments and insurancecompanies can produce, has led to an increase in such cooperation.

(1) Status and Issues
Notwithstanding the recent trend for insurance companies to participate more
actively in enhancing urban resilience, the capabilities of insurance companies havenot been fully utilized. This is because, as mentioned above, collaboration between
local governments and insurance companies still mostly takes place in the final
phase of urban policy discussions, and usually after a disaster occurs. By
participating in the earlier study phases before major decisions are made, insurancecompanies may have much to contribute regarding urban risk management
involving infrastructure development, climate change adaptation and alleviation,
disaster risk mitigation and the like.
The current lack of cooperation between insurance companies and local governments
may explain the increasing gaps in supply and demand that local governments are tasked
with addressing, particularly in areas such as protection, disaster risk mitigation, andinfrastructure investment. For example, infrastructure created without incorporating
appropriate data and expertise could be exposed to greater risks, which would create avicious cycle that can complicate obtaining insurance and investment. Conversely, in termsof risk mitigation measures that enhance infrastructure resilience, there is positive
correlation among the interests of insurance companies, local governments and residents.

The Toa Reinsurance Company, Limited — Japan’s Insurance Market 2019(2) The Role of Insurance Companies
Taking advantage of their expertise in risk management, underwriting, risk
transfer and infrastructure investment, as well as the extensive data they possess,insurance companies can demonstrate their central, catalyzing role in enhancing
urban resilience with their multifaceted capabilities.
(a) Risk Analysis for Formulating Effective Urban Policies
Insurance companies are risk assessment and management experts that possess
relevant data, and can therefore help local governments analyze the risks they face
more accurately. Proper risk analysis enables the formulation of effective urban
policies and infrastructure development plans based on risk-based financial
decisions. For example, in Copenhagen and Oslo, collaboration with the insurance
industry has brought about access to detailed insurance payment-related data notgenerally available to local governments. This has enabled them to map flood risks
based on geographical information systems, and formulate precise climate and floodrisk management plans.
(b) Promoting Urban Infrastructure Investment
Securing and promoting investment to strengthen the resilience of communities
and infrastructure is the key to implementing urban policies. As institutional
investors seeking to match assets and liabilities over the long term, insurancecompanies can play an important role through infrastructure investment. In thiscase, because of their focus on gaining increased long-term investment returns,
insurance companies have a direct interest in reducing regional and infrastructurerisks. For insurance companies, there is a synergy and strong correlation between
contributing to urban policy development based on adequate risk analysis as experts
in risk assessment/management, and investing in enhanced resilience ofcommunities and infrastructure as institutional investors.
(c) Promoting Effective Funding
Amid the increase in economic costs associated with disasters, local governments
need to structure more diversified, effective funding solutions and reduce theirreliance on the national government measures such as disaster recovery funds. In
recent years, local governments have started using insurance schemes and financial
products in their efforts to more effectively utilize their financial resources,
including those for disaster countermeasures. As risk underwriters and institutional
investors, insurance companies could analytically propose or take part in various
solutions, including parametric insurance, impact bonds and resilience bonds, inaddition to traditional general insurance. Some of these solutions can generate funds
for local governments quickly and directly should a disaster occur, making themmore cost effective than usual disaster recovery assistance from the national
government.

7

2. Collaboration between (Re)insurance Companies andLocal Governments to Enhance Urban Resilience(d) Providing Risk Mitigation Incentives and Products
Providing risk mitigation incentives through insurance product design andcustomer engagement can promote more appropriate physical risk management(such as land use and architectural planning), and contribute to enhanced urban
resilience. For example, by proposing countermeasures against climate risk andterrorism risk, and reflecting risk mitigation efforts in premiums and coverage toissue risk signals, insurance companies can help raise the level of resilience to create
an environment in which insurance is available at a reasonable premium.
Furthermore, there are cases where insurance companies and local governments
could cooperate to develop insurance products that address the unique issues andrisks faced by residents.

(3) The Effect of Collaboration
Collaboration between insurance companies and local governments eliminates
knowledge gaps and creates win-win outcomes. The main benefits for insurancecompanies include improved understanding of the decision-making process andcomplexity within local governments, as well as the establishment of smooth, longterm relationships with them. This collaboration can also create business
opportunities. For example, it may help insurance companies capture opportunities
and take the lead in the market by dealing with risks that cities are increasingly
expected to face, identify the potential of products and services besides those thattransfer risk, make use of data that local governments provide, and jointly develop
innovative products and services such as those needed for smart cities. In addition,
they can expect an increase in long-term opportunities for the provision of
insurance, as the enhancement of urban infrastructure resilience should lead to a
reduction in claim payments associated with social issues including pollution, poor
living environments, accidents, violence, and vandalism, and ultimately raise theinsurability of areas where insurance has not previously been available due to highrisk levels.

3. Key Examples

8(1) 100 Resilient Cities
Launched by the Rockefeller Foundation in 2013, 100 Resilient Cities is aframework designed to promote enhanced urban resilience. More than 100 public
and private organizations from a variety of fields, including insurance, participate in
the framework and help cities deal with physical challenges such as natural disasters
and socioeconomic stresses including high unemployment, uneconomical public
transportation systems, widespread violence and crime, and chronic shortages offood and water. The 100 participating cities receive the resources they need todevelop strategies and roadmaps for enhancing resilience. Cases that involve
insurance companies include the cities of Melbourne, Australia and Da Nang,
Vietnam.

The Toa Reinsurance Company, Limited — Japan’s Insurance Market 2019(a) Melbourne
As part of its resilience strategy, Melbourne aims to develop innovative insurance
products which make it easier for its residents to purchase coverage that meets theirneeds. The city promotes this initiative mainly to support low-income groups who
are unable to obtain existing insurance products, due to high premiums andcoverage that exceeds demand. In low-income communities where public
transportation infrastructure is inadequate, it is essential to own a car to obtain
employment and access public services. Therefore, Melbourne recognizes that theability of residents in such communities to obtain basic automobile insurance is
crucial for enhancing resilience. The initiative promotes a low-cost insurance scheme
developed by Suncorp and Good Shepherd Microfinance to provide basic home andcontents insurance and car insurance to pensioners, people who are eligible forpublic welfare, and households with an annual income of less than AUD 48,000.
Melbourne plans to work with other insurance companies in the future to promotevarious products such as insurance for small and medium-sized enterprises (SMEs).
(b) Da Nang
Da Nang is a port city in central Vietnam that faces natural disaster risks (mainly
typhoons). In 2016, it became the first city in Vietnam to announce a resiliencestrategy. Based on an analysis of past, present and future risk situations, this strategy
sets out various measures to enhance the city’s resilience in cooperation with Swiss
Re and other companies. Measures related to insurance include (1) conducting
analysis of financial risks and an insurance mechanism for disaster responses, and (2)researching and piloting an insurance mechanism for disaster resilient housing. For
item (1), Swiss Re and other affiliated organizations cooperate to achieve more
effective disaster responses by collecting information, analyzing financial risks, andpresenting solutions, given that under current relevant regulations local budgets
allocate only a 2% reserve for corrective work following a disaster. For item (2),Swiss Re performs pre-analysis to provide a tentative insurance scheme for 500
homes. VINARE* and other financial institutions are also involved in this initiative,
and the use of disaster prevention funds to subsidize insurance premium payments isunder consideration.
* Vietnam National Reinsurance Corporation.

(2) AXAAXA is promoting research into the role that insurance companies can play inenhancing urban resilience, and is working with a UN agency to improve building
standards in urban areas in developing countries. The following table provides asummary of AXA’s initiatives.

92. Collaboration between (Re)insurance Companies andLocal Governments to Enhance Urban Resilience

Table 1: AXA’s Initiatives for Enhancing Urban Resilience
Theme

Summary

Climate change responses
by cities and SMEs
(2015)• In cooperation with the United Nations Environment Programme (UNEP), conducted a surveyof 1,100 SME executives and local government oﬃcials in 18 countries in Europe, the Americas
and Asia, including both developed and developing countries.
• Local governments in developing countries have a marked tendency to only limitedly recognize
the role of the insurance industry. The two parties can do much more by working together to secure
disaster recovery funds quickly, and to utilize the expertise of insurance companies in terms ofmodeling and forecasting climate risks.
• Local governments indicated that they expect insurance companies to promote change in the
behavior of residents by linking resilience eﬀorts to premiums, and by providing educationand support for businesses and residents to help them identify and adapt to risks.
• The insurance industry is recognized as a credible source of information about climate risks. Therefore,
it may be exposed to reputational risk if it does not reﬂect resilience eﬀorts in both product design
and premiums.

Urban issues andenhancing resilience(2018)• The AXA Research Fund supports academic research that helps solve urban problems.
• A report issued in 2018 outlines research conducted with the support of the fund, on urbanization,
floods, infrastructure, pollution, infectious diseases, and the protection of vulnerable
populations. Examples of research include:• A modeling framework to evaluate global urbanization and its impact, by identifying past,present and future urbanization hotspots, and comprehensively analyzing urban components• A modeling framework for predicting coastal changes due to climate change on a 10km
spatial scale• Infrastructure improvement measures based on analysis of urban resident behaviors• A satellite radar to identify structural defects in infrastructure with millimeter precision

Building standard
improvements(2016 onward)• Cooperates with UN-Habitat to formulate recommendations and guidelines to strengthen building
standards and techniques in cities, and promote compliance with them in order to reduce humanand economic damage caused by natural disasters.
• Considers measures to strengthen building standards and techniques based on analysis of disasterdamage in urban areas of Indonesia, the Philippines, Pakistan and Haiti.

Sources: AXA, “2016 Integrated Report” (2017.4); AXA & UNEP-FI, “Business Unusual: Why the climate is changing the rules for our cities andSMEs” (2015.11); AXA Research Fund, “AXA Research Guide - Building Resilient Cities” (2018.2)

10

The Toa Reinsurance Company, Limited — Japan’s Insurance Market 2019(3) Swiss Re
Swiss Re is examining and testing measures to enhance resilience throughinsurance schemes in cooperation with China’s central and local governments as wellas insurance companies. Many of these measures are built on parametric insurance,
in which claim payments are triggered by parameters such as wind speed andrainfall, enabling policyholders (local governments) to quickly obtain funds to
respond in the event of a disaster. One of the projects is being implemented in 10
regions of Guangdong Province in partnership with local insurance companies suchas the People’s Insurance Company (Group) of China. Parametric insurance thatprovides cover (with a maximum limit of 350 million U.S. dollars) for damage
caused by typhoons and heavy rains is designed and provided according to thecharacteristics of each region. When Shanwei City, a target region of this project,
was damaged by Typhoon Haima in 2016, it received insurance compensation
within a week of the disaster. Swiss Re is also working to enhance resilience in
Dalian City and Heilongjiang Province using insurance schemes.

4. Conclusion

As discussed in this paper, collaboration between insurance companies and local
governments has gained momentum in recent years. However, it is still not very
common for insurance companies to be involved in resilience strategies of cities
from the initial study phase, and it is mainly in European companies that we can see
limited, pioneering examples.
Given that rapid urbanization is expected to continue in tandem withworsening urban problems and risks on a global scale, insurance companies can domuch more to contribute to enhanced urban resilience by functioning as risk
management, underwriting and risk transfer experts, and institutional investors.
Collaboration between insurance companies and local governments creates win-win
outcomes and can provide insurance companies with direct and potential benefits,
including those for business expansion. As such, the current situation, in whichmuch room remains for further cooperation with local governments, provides
insurance companies with an excellent business opportunity. For insurancecompanies to take advantage of this opportunity, it may be worth considering ways
to cooperate more effectively with local governments, including fostering common
understanding among stakeholders with long-term relationship-building in mind,
and identifying and presenting their role in enhancing urban resilience as well as thesolutions they can provide.
* A list of reference publications is available on “Japan’s Insurance Market” at Toa Re’s website:
https://www.toare.co.jp/english/index.htm* GIIJ Reports (Japanese only) are available on the GIIJ website:
http://www.sonposoken.or.jp/reports/

11

3.

Putting Jebi’s Insured Losses inContext: A Look Back at HistoricJapan Typhoons
Milan Simic, PhD
Executive Vice President and Managing Director, Global Business Development
Verisk Insurance

Editor’s Note: The insured loss amounts given in this article include only residential,commercial, mutual, and auto lines of business; they exclude loss adjustment expenses, loss
from Miscellaneous (e.g. marine, accident, etc.) demand surge, business interruption, etc.
The USD amounts given in this article are based on an exchange rate of JPY 1 = USD
0.0091, current as of May 28, 2019.

1. Foreword

2. Typhoon
Kathleen

12

Globally, 2018 was a costly year for catastrophes; the Camp Fire in California
topped the list of insured losses last year, followed by Hurricane Michael at number
two, and Typhoon Jebi in the number three spot. For the Japanese insurance
industry, 2018 was the costliest year for natural disasters since 2011 when the M9.0
Tohoku earthquake (Great East Japan Earthquake) and tsunami struck. Jebi is
responsible for most of the insured losses from the five major events to impact Japan
in 2018: the Western Japan floods in late June/early July; the M5.5 Osaka
earthquake on June 18; the M6.6 Tomakomai earthquake on September 6; andTyphoon Jebi in early September, followed by Typhoon Trami later that month. At
the time of this writing, industry estimates for Jebi’s insured losses alone hoveraround 13 billion U.S. dollars.
Although Jebi is firmly established as Japan’s biggest typhoon-related insurance
and reinsurance loss on record, much greater losses are possible. Japan is prone tonatural disasters and the decade that followed World War II saw numerous largescale events, including the Nankai earthquake in 1946, Typhoon Kathleen in 1947,
the Fukui earthquake in 1948, Typhoon Ida in 1958, and Typhoon Vera (Isewan
Typhoon) in 1959. If Ida or Vera were to recur today, for example, each would resultin higher losses than those of Jebi. More recently, Typhoon Mireille in 1991 was
Japan’s costliest typhoon at the time and if it were to recur today its losses would beof a similar order of magnitude to Jebi’s losses. In this article, we take a look back at
historic storms—precipitation-dominant (Kathleen, Ida), surge- and winddominant (Vera) and wind-dominant like Jebi (Mireille, Bart, Songda)—tounderstand Jebi’s losses in the context of historic Japan typhoon losses.

On September 15, 1947, Typhoon Kathleen made landfall in Kanagawa
Prefecture, just south of Tokyo. One-minute sustained winds at landfall were
estimated at 120 km/h—just barely equivalent to a Category 1 hurricane. In
Shizuoka Prefecture, south of Kanagawa, one-minute sustained winds exceeding 88km/h (tropical storm strength) were reported. Having weakened by the time oflandfall, wind damage was restricted to towns along the immediate coast.
More extensive, however, was the damage from precipitation-induced flooding
from Typhoon Kathleen, which dropped between 300 and 800 mm of rain in theTone River basin in just two days (Figure 1)—from September 13 to 15—yielding
the highest flood discharge ever observed. North and east of Tokyo, several dikes
were breached and embankments suffered failures, resulting in severe flooding along
the Tone River, particularly in Kurihashi. More than 303,000 buildings wereinundated, and 2,000–4,000 people were killed.

The Toa Reinsurance Company, Limited — Japan’s Insurance Market 2019

Figure 1. Storm track and modelled observed accumulated precipitation totals for
Typhoon Kathleen (1947). (Source: AIR)

Typhoon Kathleen is still regarded as one of Japan’s costliest and mostdevastating precipitation-induced flood disasters. AIR estimates that if Kathleen
were to recur today, insured losses would total approximately 1,294 billion yen(11.8 billion U.S. dollars).

3. Typhoon Ida

On September 26, 1958, Typhoon Ida struck Japan’s Kanagawa Prefecture on theisland of Honshu. While there was some wind damage, the vast majority of Ida’s
damage was caused by the deluge of rain from the Izu Peninsula to the capital city ofTokyo and beyond (Figure 2), which led to flooding and mudslides.

13

3. Putting Jebi’s Insured Losses in Context: A Look Back at Historic Japan Typhoons

Figure 2. Storm track and modelled observed accumulated precipitation totals (mm)for Typhoon Ida. (Source: AIR)

Ida’s rains drenched the region during the course of two days, causing several
rivers east of Tokyo to burst their banks and flood the suburbs there. Some of theworst destruction and loss of life, however, was along waterways in the western
suburbs. Ida’s heaviest rains fell west of Tokyo, inundating the headwaters in themountains and river valleys, triggering flooding and mudslides. The area of the Izu
Peninsula around the Kano River (Kanogawa) experienced some of the highest rainfall
rates.
AIR estimates if Ida were to recur today, it would result in insured losses ofapproximately 2,466 billion yen (22.5 billion U.S. dollars). Typhoon Ida remains oneof the country’s most devastating precipitation-induced flood disasters.

4. Typhoon Vera:
Japan’s Most
Destructive
Typhoon and Its
Impact on the
Insurance
Industry

14

Ida preceded Typhoon Vera—the costliest weather-related disaster in Japan’srecorded history—by only one year; a significant portion of the damage was the resultof storm surge. On September 26, 1959, a monstrous Category 4 storm with winds
near 240 km/h came ashore west of Ise Bay in south-central Japan. The storm wasdubbed Vera1. Its record-high storm surge crashed over seawalls and breached coastal
dikes hundreds of years old. Vera moved northeast over land toward Ise Bay, where its
winds drove bay water toward Nagoya Port. The port experienced storm surge ofnearly 4 metres at 9:35 p.m. local time. Dikes caved immediately, giving people in
Nagoya and surrounding villages little time to flee. The city of Nagoya was devastatedin just three hours; its harbor—strewn with bodies, debris, and timber from a local
timber factory—was subsequently described as a “sea of dead.”

The Toa Reinsurance Company, Limited — Japan’s Insurance Market 2019

Figure 3. Track and wind speed footprint of Typhoon Vera. (Source: AIR)Wind Speed (km/h)
19065Vera tracked quickly across Honshu, losing little strength over land (Figure 3). In thesmall village of Nagano in central Japan, high winds ripped the roofs from hundreds of
traditionally constructed wooden homes. Heavy precipitation swelled rivers so greatly thatthey spilled over their banks. Landslides were widespread. Conditions remained treacherous
even after Vera’s departure. Muddy water continued to pour through breaches in dikes on
the south-central coast for several days until they were finally repaired. Because the area justnorth of Ise Bay is at or even below sea level, some districts remained flooded even 100 days
after the storm.
Altogether, Typhoon Vera flooded more than 360,000 homes, 190,000 of which were
submerged2 (Oda, 2006). Another 830,000 homes sustained some level of damage. The
storm killed an estimated 5,000 people and injured 66,000. Much of the damage was in
Aichi and Mie prefectures. AIR estimates if Vera were to recur today, it would result ininsured losses of approximately 1,943 billion yen (17.7 billion U.S. dollars), caused mostly
by wind (1,819 billion yen, 16.63 billion U.S. dollars).
Vera became the event used by insurers and reinsurers to define the reserve for a 70-year
return period event. An amendment to the enforcement regulations of the Insurance15

3. Putting Jebi’s Insured Losses in Context: A Look Back at Historic Japan Typhoons

Business Law on April 1, 2005, requires insurers to base their catastrophe reserves forwindstorm or flood on recurrence of Typhoon Vera3. This increases the minimum
windstorm return period for reserving and reinsurance purposes from 20 years to 70 years.

5. Typhoon Mireille:
Typhoon-Related
Insured Loss
Record-Setter

Typhoon Mireille whipped across Japan with winds in excess of 160 km/h (Figure4), causing damage in 41 of Japan’s 47 prefectures, destroying more than 170,000
houses and resulting in the largest insured loss claim ever paid for a typhoon-related
loss in Japan’s modern history. AIR estimates Mireille’s recurrence today would resultin insured losses of 1,115 billion yen (10.18 billion U.S. dollars), caused mostly bywind (1,040 billion yen, 9.5 billion U.S. dollars). Mireille remained Japan’s costliest
typhoon for decades, until Jebi.
Figure 4: Track and wind speed footprint of Typhoon Mireille. (Source: AIR)Wind Speed (km/h)
18065

On September 27, when Mireille made landfall in Kyushu’s Nagasaki Prefecture,
it was the third typhoon of the 1991 season to affect Japan in just two weeks. Whileinteraction with Typhoon Nat may have influenced Mireille’s eventual track, it was not
the only factor instrumental in Mireille’s rise to the top of Japan’s insured loss charts.

16

The Toa Reinsurance Company, Limited — Japan’s Insurance Market 2019

Mireille took a track typical of other typhoons that have caused major damage on
Japanese soil. Furthermore, as is typical, its strongest winds at landfall were on theright, or eastern, side of the storm (which is a result of the combination ofcounterclockwise rotational winds and forward motion).
Other typhoons that have caused significant wind damage in Kyushu include
Typhoon Bart in 1999 and Typhoon Songda in 2004, both of which took paths very
similar to Mireille’s (Figure 5), but would each cause less in insured losses than
Mireille. Bart would cause 675 billion yen (6.17 billion U.S. dollars) if it were torecur, caused mostly by wind (639 billion yen, 5.84 billion U.S. dollars); Songda
would cause 778 billion yen (7.11 billion U.S. dollars) in insured losses if it were torecur, also mostly caused by wind (754 billion yen, 6.89 billion U.S. dollars).
Figure 5: Tracks for typhoons Mireille (1991), Bart (1999), and Songda (2004) werevery similar. (Source: AIR)

The large losses from Mireille—as compared to those from Songda—were in part a
result of Mireille’s lower central pressure at landfall (even though both storms exhibited
identical central pressure values three hours later, and nearly identical radii ofmaximum winds). Processes related to extratropical transitioning were also prominently
at work in Mireille, much more so than they were in Songda (or in Bart). These
processes changed Mireille’s wind field, and in doing so, contributed to higher losses.

17

3. Putting Jebi’s Insured Losses in Context: A Look Back at Historic Japan Typhoons

6. Typhoon Jebi:
Managing Japan
Typhoon Risk
Today

Typhoon Jebi initially struck Shikoku, the smallest of Japan’s four main islands,
on September 4, 2018. The equivalent of a Saffir-Simpson Category 3 hurricane when
it made landfall, Jebi was the most powerful typhoon to hit Japan in 25 years (Figure6). A second landfall followed near the city of Kobe, 30 km west of Osaka, on
neighboring Honshu. Major cities in the Kansai region, among them Osaka, Kyoto,
and Kobe, were brought to a halt. The typhoon caused major damage to buildings andinfrastructure, seriously impacted shipping and transportation, and led to significant
business interruption. While Jebi’s insured losses have already set a record, losses
would have had more of an impact if insurers were not required to base their reserves
on a recurrence of Typhoon Vera.
Figure 6: Track and wind speed footprint of Typhoon Jebi. (Source: AIR)Wind Speed (km/h)
18065

The year 2018 will surely reinforce not just to industry newcomers, but even to
those who have spent their careers assessing and managing catastrophe risk, that it isimportant to prepare for a wide range of scenarios to respond effectively when disasterdoes strike. Preparing for large losses before they occur by using model scenarios toprobe a portfolio’s strengths and weaknesses is critical to continued solvency and18

The Toa Reinsurance Company, Limited — Japan’s Insurance Market 2019

resilience. Jebi is not an extreme tail event; far greater losses are possible (Figure 7).
The AIR Typhoon Model for Japan includes Extreme Disaster Scenarios (EDS) that
represent unlikely, but scientifically plausible, scenarios that cannot be captured bystandard stochastic modelling techniques. (Re)insurers can perform detailed loss
analyses against these “grey swan events” so that companies can grasp the possible
impact on their business.
Figure 7: Modelled insured losses for historic typhoons if they were to recur and 5modelled insured losses for 5 Extreme Disaster Scenarios (EDS) in the AIR
Typhoon Model for Japan.
(Billions of U.S. dollars)
80
70
60
50
40
30
20
10
0
Kathleen
Wind

Ida
Flood

Vera

Mireille

Bart

Songda

Jebi*

EDS1

EDS2

EDS3

EDS4

EDS5

Surge

* Jebi’s losses reflect industry estimates as of May 2019.

No catastrophe model can predict what the next natural disaster will actually beor when it will occur. This fundamental uncertainty makes it all the more importantfor companies to use catastrophe models to prepare for such losses. The full range of
scenarios a model can generate—simulating several perils that can impact Japan—
provide a unique and important perspective on an organisation’s risk. The carefulanalysis of model results can help risk managers prepare for many contingencies—thus
ensuring that another Jebi, for example, will not be entirely unexpected.
Ultimately, catastrophe models—such as the AIR Typhoon Model for Japan, oneof a suite of AIR models for Japan—help organisations evaluate the full range ofpotential events so that they can manage the risk effectively.
1. The Japan Meteorological Agency, which assigns numbers rather than names to typhoons, madean exception in this case after the fact, calling it the Isewan Typhoon because of its destruction of
the Ise Bay (wan) region.
2. Submersion indicates flooding to the first floor level.
3. Privatization of the Japanese insurance market didn’t happen until 1996; regulating catastrophe
reserves was not a priority until nine years later, in 2005, the year after 10 typhoons—more than
twice the annual average—made landfall in Japan.

19

4.
1. The Operating
Environment of
the Non-Life
Insurance
Industry

2. Overview of the
Non-Life
Insurance
Industry

Trends in Japan’s Non-Life Insurance
Industry
Underwriting & Planning Department
The Toa Reinsurance Company, Limited

The GDP of Japan ranks third in the world and its economy has continued to
grow moderately in recent years. According to the Japanese government’s economic
outlook announced by the Cabinet Office, the real GDP growth rate in fiscal 2018
was 0.9% despite the impact of a series of natural disasters during the 2018 summer,
and the rate in fiscal 2019 is forecast to be around 1.3%.
Looking at the Japanese non-life insurance market, new advances in automateddriving technology are projected to result in a reduction in automobile insurance
sales volume; this in a market environment in which automobile insurance currently
accounts for about half of net premium income of direct non-life insurancecompanies. This is just one of the challenges likely to impact market growth.
Under these circumstances, non-life insurance companies in Japan aredeveloping markets by providing new products and services aligned with changing
customer needs and implementing initiatives to increase operating efficiency toachieve sustainable growth.

(1) Status of Non-Life Insurance Companies and Cooperatives
Japan’s non-life insurance industry comprises 27* Japanese non-life insurancecompanies that are members of the General Insurance Association of Japan (GIAJ)
and 19 companies that are members of the Foreign Non-Life Insurance Associationof Japan, Inc. (FNLIA). Through an analysis of the financial statements of member
companies, it is evident that Japan’s non-life insurance market is an oligopoly inwhich the three largest non-life insurance groups (MS&AD Insurance Group
Holdings, Inc., Sompo Holdings, Inc. and Tokio Marine Holdings, Inc.) accountfor 87% of net premium income written by the 27 GIAJ members as a whole.
* As at March 31, 2019. The current members of GIAJ are 27, as 1 additional non-life insurer
joined the GIAJ from April 1, 2019.

Japan’s non-life insurance companies have increased operating efficiency sinceliberalization in 1996, and have conducted numerous mergers and businessintegrations since 2000. As a result, for all non-life companies, the underwriting
expense ratio (other than commission and brokerage) in fiscal 2018 decreased to
15%, compared with 21% for all non-life insurance companies in the industry forfiscal 1995, prior to liberalization.
Major business integrations among Japanese non-life insurance companies in2018 are as follows.
AIG Group’s AIU Insurance Company, Ltd. and The Fuji Fire and Marine
Insurance Co., Ltd. established a new company, AIG General Insurance Co., Ltd.,in January 2018 through a merger. This new organization can leverage the strengthsof the two companies, which are rooted in the Japanese market.
In addition to the above, Rakuten, Inc. made The Asahi Fire & Marine
Insurance Company, Limited a wholly owned subsidiary in April 2018, and changed
its name to Rakuten General Insurance Co., Ltd. in July 2018. Rakuten operates ina wide variety of businesses via the Internet, with a focus on e-commerce. Rakuten is20

The Toa Reinsurance Company, Limited — Japan’s Insurance Market 2019

targeting growth through means such as expanding its lineup of insurance productsthat are highly compatible with Internet services and entering alliances with othercompanies.
The cooperative market is another area of note, as it has a presence that issecond only to the non-life insurance market in terms of premium volume. Even if
we look only at the main cooperatives that make up the Japan Cooperative
Insurance Association Incorporated, they alone had premium income of 2,894
billion yen in fiscal 2017 (excluding life cooperatives and pension cooperatives).
Furthermore, the small-amount, short-term insurance business was introduced
in Japan following an amendment to the Insurance Business Act in April 2006. As
the name implies, this business is limited mainly to selling insurance in small
amounts with limited terms. On the other hand, regulations now make it possible
for companies that are not insurance companies to enter this business, much moreeasily than in the case of establishing an insurance company. For example,
companies need only register and do not require a license to operate, the minimum
capital required is 10 million yen compared to 1 billion yen for an insurancecompany, and participants may sell both life and non-life insurance. The number ofmember companies of The Small Amount & Short Term Insurance Association ofJapan continues to grow and the scale of the market continues to expand. Non-life
insurance products sold in this market are mainly household insurance, including
fire insurance for home contents and renters’ liability insurance sold through thereal estate agent channel, pet insurance, as well as products to cover other types of
expenses.

The Small Amount & Short Term Insurance Market Data
Figure 1: Member Companies

Figure 2: Premium Income (excl. Life andMedical Insurance)(Total companies)(Billions of yen)

100

97

90
81.7

95

80

90

71.6

88

70
63.6

84

85
81

60

55.7

80
50.3

76

50

75

70
2013

2014

2015

2016

2017

40

(Fiscal year)

2013

2014

2015

2016

2017

(Fiscal year)

Source: The Small Amount & Short Term Insurance Association of Japan

21

4. Trends in Japan’s Non-Life Insurance Industry(2) Natural Disasters in Fiscal 2018
Japan suffered from many natural disasters in 2018. In particular, wind andflood disasters caused extensive damage, with wind and flood claims paid projected
to total the largest single-year loss ever. Details of the major wind and flooding
disasters in Japan in fiscal 2018 are as follows:
Table 1: Major Wind and Flooding Disasters in Japan in Fiscal 2018
Heavy Rain in
Western Japan(Typhoon No. 7)

Typhoon No. 21(Jebi)

Typhoon No. 24(Trami)(Reference)***1991 Typhoon No. 19(Mireille)

July 2018

September 4, 2018

September 30, 2018

September 25~28, 1991−

950hpa960hpa940hpaDate of loss*
Central pressure at landfall*

Numbers of insured
automobiles and policies**

Total amount of claims paid
(Millions of yen)**

Motor
Fire
Misc.

25,11024,146
6,064

Total

55,320

Motor
Fire
Misc.

28,307
151,991
15,297

Total

195,595

Motor
Fire
Misc.
MarineTotal

113,915
718,862
20,811
3,696
857,284

Motor
Fire
Misc.

29,322
370,968
12,417

Total

412,707

Motor
Fire
Misc.
MarineTotal

77,981
920,227
16,06953,5281,067,806

Motor
Fire
Misc.

11,459285,595
9,037

Total

306,091

Motor
Fire
Misc.
MarineTotal

108,802484,695
12,5681,259
607,324

Motor
Fire
Misc.
MarineTotal

26,938497,486
25,05318,483567,960* Source: FDMA (Fire and Disaster Management Agency)** Source: GIAJ (The General Insurance Association of Japan) as at the end of March 2019*** The typhoon resulting in the largest amount of claims paid until fiscal 2017

Claims paid due to Typhoon Jebi were particularly large, and to date are thelargest ever in Japan, exceeding the 568 billion yen in claims paid due to Typhoon
Mireille in 1991, formerly the largest. Of note, claims paid due to Typhoon Mireilleare estimated at about 1 trillion yen when adjusted to the current amount of fire
insurance.
One reason for the large increase in claims paid for Typhoon Jebi is that theamount paid per claim is higher than in the past. Based on an estimate using datafrom GIAJ, the amount paid per claim for Typhoon Jebi was approximately 1.3
million yen, significantly higher than the average of 0.7 to 0.8 million yen for pasttyphoons. One reason is that about half the claims paid for Typhoon Jebi were inurban areas of Osaka Prefecture.
Japan’s non-life insurance companies have dealt with this series of natural
disasters by improving their system for claims handling, and introducing new rapid
response initiatives including the use of smartphones and tablets for remoteassessment of claims, the use of drones to survey damage and the use of robotic
process automation (RPA).

22

The Toa Reinsurance Company, Limited — Japan’s Insurance Market 2019(3) Trends in Business Results of Non-Life Insurance Companies
for Fiscal 2018
Japan’s non-life insurance companies utilized reinsurance coverage and reversed
catastrophe loss reserves to generate stable earnings in fiscal 2018 despite the many
natural disasters mentioned above. The following is a summary of the main financial
results (total) of the 26 non-life GIAJ members in fiscal 2018.
Net premium income in all lines of business increased 12 billion yen from theprevious fiscal year to 8,393 billion yen.
Net claims paid (paid basis) increased by 622 billion yen to 5,324 billion yen
due to the impact of typhoons and other natural disasters in Japan. As a result, theloss ratio for fiscal 2018 increased by 7.6 percentage points to 69.1%.
Expenses decreased by 10 billion yen to 2,725 billion yen. The net expense ratio
decreased 0.1 percentage points to 32.5%.
Underwriting profit (earned/incurred basis) decreased by 87 billion yen to 193
billion yen. Ordinary profits, calculated as the sum of underwriting profit andinvestment profit, increased by 52 billion yen to 864 billion yen. After deducting
tax expense, net income decreased by 2 billion yen to 676 billion yen.
Consolidated net premium income reflected the increase on a non-consolidated
basis. Japan’s non-life insurance groups utilized reinsurance coverage and reversed
catastrophe loss reserves to cover the impact of natural disasters in Japan during
fiscal 2018, and the significant impact from hurricanes in the previous fiscal year
did not recur. Ordinary profits therefore increased year on year.

23

4. Trends in Japan’s Non-Life Insurance Industry

3. Recent Non-Life
Insurance
Industry Trends(1) New Product Development(a) Cyber Insurance
Companies have had to deal with major changes in their operating environment overthe past several years because of the frequent occurrence of large-scale leakage of personal
information and the risks posed by simultaneous cyberattacks such as those from
WannaCry and NotPetya.
Under these circumstances, in addition to providing cyber insurance, Japan’s major
non-life insurance companies have also expanded support services for potential clients
including consultation for cyber security, such as information security diagnostic services
and drills for combating targeted e-mail cyberattacks.
It is said that cyberattacks on Japan will continue to increase because of the upcoming2020 Tokyo Olympics and Paralympics. Insurance companies have partnered with cybersecurity companies to provide a variety of additional services.
Non-life insurance companies are also developing enhanced coverage for cyber risks
that are becoming increasingly complex and sophisticated.
(b) Sharing Economy
The sharing economy market is rapidly expanding in the United States and Europe,and is expected to expand in Japan as well. Services from U.S companies such as Airbnb
and Uber are now available in Japan, and sharing economy services developed in Japan are
gaining in popularity.
The size of the car sharing market is expanding due to the increase in the number ofvehicles and car stations, and corporate use is also increasing. The share cycle is also rapidly
being introduced in local governments.
Barter, recycling and fashion rental services have also launched recently, allowing
people to enjoy various fashions without having to take care of cleaning.
Given these circumstances, Japan’s non-life insurance companies see the changing
social environment in which the sharing economy is gaining traction as a business
opportunity, and are partnering with related organizations to contribute to thedevelopment of a sustainable industry. Their efforts to develop and market new insurance
products to address the sharing economy have attracted attention.
Regarding inbound visitors to Japan, insurance companies are developing new
products and providing new services to capture demand. Examples include thedevelopment of multilingual insurance products that bundle coverage for risks associatedwith short-term rental of private residences.
It is expected that the non-life insurance industry will be able to cope appropriately
with the evolving risks in the sharing economy market as it expands further.

(2) Innovation
The insurance industry has embraced the term “InsurTech” to refer to the fusion of
insurance and information technology and to encourage innovation in non-life insurance
products and the operations of non-life insurance companies.

24

The Toa Reinsurance Company, Limited — Japan’s Insurance Market 2019

Artificial intelligence (AI) has been used to improve the quality of customer service,
such as employing voice recognition of customer inquiries at call centers and displaying
candidate responses on the computer screens of operators. In recent years, non-life
insurance companies have been introducing AI in other areas as well. Damage assessment is
one example. Initiatives are underway to automate insurance claim calculation and for the
allocation of fault for automobile accidents through AI analysis of images taken withsmartphones and drive cams. AI is also being used in insurance underwriting to analyze
corporate creditworthiness based on financial information, and initiatives to automate
screening for credit guarantee insurance underwriting are under way. Progress among nonlife insurance companies in deploying AI in their operations will support improved
customer satisfaction by increasing speed and efficiency, and enhancing objectivity andrationality in customer services.
Companies are also applying blockchain (distributed ledger) technology to insurance
policies. Several non-life insurance companies also got together in a consortium to apply
blockchain technology to trade operations in 2017, and some companies conducteddemonstration tests independently. The actual application of blockchain technology toinsurance policies is expected to optimize business processes, which will dramaticallyaccelerate procedures and improve the quality of the services that non-life insurancecompanies provide by enhancing security.
Automobile manufacturers and non-life insurance companies alike are participating in
the development of vehicles with automated driving technology. Insurance companies are
selling insurance that covers risks related to automated driving demonstration tests, and areproviding driving data collected using the Internet of Things (IoT) and their historical claims
records of past accidents, along with expertise in accident risk prevention and damage
mitigation enabled by these data. In addition, they are providing products for risks associatedwith automated driving technology, including endorsements for accident victims ofautomated driving in cases where the driver responsibility of the automated vehicle cannot
be verified immediately. In this way, non-life insurance companies are contributing to thedevelopment of automated driving technology, while working to ensure that society is secureand safe by developing products that support the increasing prevalence of automated driving.

(3) Expansion of Overseas Business
The three largest non-life insurance groups have all positioned overseas business as a
growth driver, and have aggressively implemented initiatives such as forming businessalliances with local insurance companies and engaging in M&A.
Figure 3 shows that overseas net premium income* for the three largest non-life
insurance groups has been trending upward. Overseas net premium income for theseinsurance groups in fiscal 2018 was about 5 times that of fiscal 2010, and overseas businessaccounted for approximately 23% of net premium income for the three largest non-life
insurance groups.
* In this section, “overseas net premium income” shows the total of net premium income from
non-life insurance and life insurance premiums.

25

4. Trends in Japan’s Non-Life Insurance Industry

Figure 3: Trends in Overseas Net Premium Income for the Three Largest Non-Life
Insurance Groups(Billions of yen)
3,000

(%)
25

2,500

20

2,000
15
1,500
10
1,000
5

500

0

2010

2011

2012

2013

2014

2015

2016

2017

2018

0

(Fiscal year)
Overseas net premium income (left scale)

Percentage of overseas net premium income (right scale)(Total of the three groups including life insurance)

Source: Calculated by Toa Re using data compiled from the financial results of each of the three groups

Key overseas business developments of the three largest non-life insurance groups
and recent trends are as follows:
MS&AD Holdings is concentrating on Asian business and the reinsurance
business. Mitsui Sumitomo Insurance acquired the general insurance operations in
Asia of U.K. company Aviva plc in 2004, and is using it as its base for advancing into
the ASEAN region. For Asian business, it also enhanced its presence by acquiring
Singapore insurer First Capital Insurance Limited in December 2017. Regarding thereinsurance sector, it strengthened business in 2016 by completing the acquisition of
Amlin plc of the United Kingdom.
Sompo Holdings acquired leading U.K. specialty (re)insurer Canopius Group
Limited in May 2014. In addition, it significantly expanded its overseas business in2017 by completing the acquisition of Endurance Specialty Holdings Ltd. (now called
Sompo International). Also in 2017, Sompo Holdings restructured its overseas
business, making Sompo International the core overseas insurance business of thegroup, and selling all Canopius shares to a private equity investor.
Tokio Marine Holdings has developed its overseas operations particularly inEurope and the United States. It acquired U.K. company Kiln Ltd. and U.S. company
Philadelphia Consolidated Holding Corp. in 2008, then acquired U.S. company
Delphi Financial Group, Inc. in 2012. Moreover, in October 2015 it acquired U.S.
specialty insurer HCC Insurance Holdings, Inc. to further grow its overseas insurance
business through diversification and to improve capital efficiency. At the same time,
Tokio Marine Holdings sold its reinsurance subsidiaries (Tokio Millennium Re AG
and Tokio Millennium Re (UK)) in 2018 and reviewed its business portfolio.

26

The Toa Reinsurance Company, Limited — Japan’s Insurance Market 2019(4) Trends in Regulation by Regulatory Agencies
The Financial Services Agency (FSA) considers introducing evaluation andsupervision methods based on economic value in parallel with the Insurance CapitalStandard (ICS) by the International Association of Insurance Supervisors (IAIS).
Economic value-based solvency evaluation will come into force in line with the ICS
application schedule (to be introduced as a full-fledged regulation after a 5-year
monitoring period in fiscal 2025).
The FSA has noted that introducing the economic solvency ratio into theregulatory regime may bring unexpected consequences, such as excessively risk-averse
behavior among insurance companies. Therefore, it is investigating unintended
consequences and international trends while continuing its examination withemphasis on dialogue with relevant parties.
The FSA recognizes that it needs to continuously improve the quality of its
financial administration as an organization that always anticipates upcoming issues
and transforms itself to meet the expectations of the people of Japan and earn theirtrust, and to keep up with the rapid pace of finance-related changes. It is
implementing a number of initiatives aimed at achieving this objective. These wideranging initiatives include changes in organizational culture and governance. The
major organizational changes that the FSA implemented in 2018 are representative. In
the past, units responsible for on-site inspection were separate from units responsible
for off-site supervision, but they are now integrated in a single organization for on-siteand off-site monitoring to make the ongoing dialogue with financial institutions more
effective and efficient. The FSA will continue to regularly review inspection andsupervision structures and procedures to ensure quality, circumspect monitoring andappropriate regulatory actions.

27

5.
1. Overview ofBusiness Resultsfor Fiscal 2018

Trends in Japan’s Life Insurance
Industry
Life Underwriting & Planning Department
The Toa Reinsurance Company, Limited

The fiscal 2018 business results for 41 life insurance companies are as follows:(1) Total Amount of New Business
During the fiscal year ended March 31, 2019 (fiscal 2018), the total insured
amount of new business for individual life increased by 16.4% to 66.7 trillion yen.
The total insured amount of new business for individual annuity insurance
increased by 10.4% to 5.3 trillion yen. On the other hand, the total insured amountof new business for group insurance decreased by 4.4% to 4.7 trillion yen.

(2) Total Amount of In-force Business
The total insured amount of in-force business for individual life decreased by
0.5% year-on-year to 848.7 trillion yen, which was essentially unchanged from theprevious fiscal year despite an increase in the total insured amount of new business.
Similar to the trend of total insured amount of new business for individual
insurance, the total insured amount of in-force business for individual annuity
insurance decreased by 1.1% to 104.4 trillion yen. On the other hand, the total
insured amount of in-force business for group insurance increased by 2.1% to 391.7
trillion yen.

(3) Premium Revenues and Total Assets
Total premium revenues increased by 4.2% year-on-year to 35.2 trillion yen.
Similar to the previous fiscal year, total assets increased by 1.7% to 387.6 trillion
yen due to the increase in foreign securities.

2. Trends in the Life
Insurance
Industry

28

The Use of InsurTech
The life insurance industry is increasingly using so-called “InsurTech,” whichrefers to a range of technologies such as artificial intelligence (AI) and robotic
process automation (RPA). Several factors, including technological developments,
are considered reasons for the spread of InsurTech, but one overarching factor is theworking population shortage resulting from the declining birthrate and aging
population. Japan’s working population (aged from 15 to 64), which was 86.22
million in 2000, is currently down by approximately 12.5% to 75.42 million and is
expected to continue declining. InsurTech is expected to be a means to solve labor
shortage problems.
InsurTech was initially put to use in limited areas such as claims assessment andclerical procedures. For example, the conventional claims assessment procedure
places a significant burden on employees because it requires identification of
misstatements and the like, and judgment may vary due to individual discretion.
With AI technology, however, a claims analyst can easily access similar cases fromclaims payment records and make assessment decisions based on examples fromthose records. Based on the information provided by AI, even relatively
inexperienced claims analysts can make payment decisions accurately and quickly,
which improves operating efficiency and quality.

The Toa Reinsurance Company, Limited — Japan’s Insurance Market 2019

Until recently, the use of InsurTech had been limited to the back office asmentioned above, but its use for sales support has now begun. For example, sinceApril 2019 Nippon Life Insurance Company (hereinafter referred to as “Nippon
Life”) has been using InsurTech to collect useful information for sales activities. One
example is the use of IBM’s Watson Explorer and API services to access topics andarticles from a database of customers and their insurance policy information. This
enables Nippon Life to draw out information that is optimally aligned withcustomer needs. In addition, Nippon Life has begun offering a free training service
on the subject of preventing dementia. Available to the general public as well as
policyholders, it is structured as a quiz delivered by an AI speaker, but moderated bya medical specialist.
Insurance companies are using these and other initiatives to maintain andcapture share in the shrinking domestic market by increasing points of contact withagents and customers.
With the use of InsurTech likely to increase, attention is now focused on how
insurance companies deploy it to enhance productivity and deliver greater added value.

3. Regulatory
Trends

Suspended Sales of Increasing Term Life Insurance for Executives
In February 2019, the Financial Services Agency (FSA) stated that someincreasing term life insurance products for executives might deviate from theprimary objective of insurance, and as such were cause for concern. In response,
some life insurance companies stopped selling increasing term life insurance
products for executives. Increasing term life insurance products were sold by about
half of Japanese life insurance companies. Sales in fiscal 2017 totaled between 800
billion yen and 900 billion yen, about 30% of annualized premiums from newindividual insurance policies and annuities in the Japan market.
Increasing term life insurance products have three main characteristics: 1) theirability to take full advantage of the tax benefits of corporate policies, 2) their ability
to maximize cash value, and 3) their ability to generate high commissions forsalespeople/agencies.
In terms of the way taxes are calculated in Japan, companies can add up thepremium costs of corporate policies to the full amount in accordance with the typeof insurance product. Increasing term life insurance products were designed to takefull advantage of such tax benefits.
In addition, these products are designed to maximize cash value. Cash value canbe maximized through the accumulation of large amounts of premium reserve
during the early stage of the policy by suppressing the death benefit during thatstage and raising it at a later stage. In recent years, a large volume of these products
have been introduced, emphasizing this feature (limiting claims payment during theearly stage only to the accident death benefit) to the fullest extent.
Increasing term life insurance products generate high commissions forsalespeople/agencies against the backdrop that companies are free to set loading
premiums (this process was not included in the FSA’s list of items requiring approval29

5. Trends in Japan’s Life Insurance Industry

in new product development in 2006). The original intent of the FSA was topromote competition among insurance companies and reduce these premiums – assuch this item was not included on the list of items requiring approval. However,this had the opposite effect on increasing term life insurance products because
companies set extremely high loading premiums to enhance the incentive forsalespeople/agencies to sell these products.
Under these circumstances, the FSA expressed concern that some increasing
term life insurance products had unnaturally high premiums and high surrender
value and lacked rationality and relevance as insurance products, and asked
companies to revise the product design if the products were so. At the same time,
the National Tax Agency also expressed concern, and suggested that they would
revise tax rules. If the tax rules are revised, companies will only be able to take fulladvantage of the tax benefits of corporate policies if the designated surrender value
rate falls within a certain range.
Various types of insurance products with tax benefits have been developed, notonly increasing term life insurance products. The relevant authorities have always
tightened regulations on products that go too far, so it would seem to be a game ofcat and mouse.
Given the challenging market conditions caused by the low birth rate, aging
society and the government’s protracted low-interest policy, suspending sales of a
popular product is without doubt a major blow to the life insurance market.
Attention is now focused on how life insurance companies will fill the void.

4. Product Trends

30(1) Insurance Products with Wellness BenefitsLife insurance companies are developing new insurance products to stimulate
new consumer needs. Among them, insurance products with so-called “wellness
benefits,” which give policyholders incentives such as premium discounts for being
healthy, have drawn attention.
Increasing longevity in Japan is a reason for interest in these products. In fact,
in the revision of the standard mortality table in April 2018, the mortality rate was
reduced due to an increase in average life expectancy and mortality improvement.
In addition, increased longevity leads to an increase in overall healthcare expenses.
Healthcare expenses for elderly people aged 65 and over are expected to be 1.5 times
higher in 2025 than they were in 2015. This market environment suggests that
insurance products for long and healthy life will be in greater demand than ever before.
Several companies already sell insurance products with wellness benefits, andthe product lineup is diverse. In December 2016, The Neo First Life Company,
Limited, a subsidiary of Dai-ichi Life Holdings, Inc., was first in the industry tolaunch a product that uses “health age,” calculated using data including body massindex (BMI), blood pressure, urine tests, and blood tests, instead of “real age” tocalculate the premium at renewal. Subsequently, Sompo Japan Nipponkoa
Himawari Life Insurance, Inc. (from October 2019 the name will change to Sompo
Himawari Life Insurance Inc., hereinafter referred to as “Himawari Life”) launchedThe Toa Reinsurance Company, Limited — Japan’s Insurance Market 2019a product that, in the case of improved health, provides the policyholder with arebate, which is equivalent to the difference between the paid premium and thepremium calculated retroactively to the policy inception date.
The ways in which products in this category provide incentives are not limited to
the review of premiums according to health condition as described above. For
example, The Dai-ichi Life Insurance Company, Limited (hereinafter referred to as“Dai-ichi Life”) launched a new rider that reduces premiums simply with thesubmission of a health certificate. This rider can be attached to products that were soldin March 2018, and thereafter. The development of this rider was based on an analysisof medical big data, which shows a significantly lower incidence of death or theincidence of three major illnesses among people who get medical checkups comparedto those who do not. Dai-ichi Life has sold more than one million insurance policies
since March 2018, and about 80% of them have this rider attached.
More insurance companies are expected to analyze their own big data to develop
insurance products with wellness benefits. However, this is a new product category, so
companies need to scrutinize it closely to determine whether it will become amainstream of the market and if the products can achieve their intended results.

(2) Expanded Sales of Dementia Insurance
In recent years, sales of dementia insurance have grown in the Japan market. In
2016, Taiyo Life Insurance Company (hereinafter referred to as “Taiyo Life”) andAsahi Mutual Life Insurance Company (hereinafter referred to as “Asahi Life”)
launched this type of product ahead of other companies, and sales have been solid.
Since then, other companies have also started selling these products. This trend isagainst a backdrop of the aging of Japan and the rising number of dementia
patients. The number of dementia patients aged 65 or older was 4.62 million in2012, and is expected to reach 7.30 million in 2025, accounting for about one infive people aged 65 or older. As a result, the medical and long-term care expenses forpatients with dementia will increasingly have a negative impact on family finances.
In March 2016, Taiyo Life was the first in the industry to launch a simplified
issue insurance product that pays a lump sum if the insured is diagnosed with “organic
dementia,” a type of dementia caused by changes in brain tissue, and the condition
continues for 180 days. This dementia coverage is also available to people who havebeen hospitalized in the past or feel anxiety about their health, because it is a
simplified issue insurance product. In April 2016, Asahi Life launched a dementia
insurance product with benefits linked to the standards stipulated by the public
nursing care insurance system. Asahi Life had already launched a similar product for
nursing care in 2012; then began selling dementia coverage as need increased.
Other companies followed by introducing their own products with specialized
coverage for dementia. A recent feature is the provision of services to support theprevention and early detection of dementia. In October 2018, Himawari Life
launched dementia insurance that was the first in the industry to cover mild
cognitive impairment (MCI), which is the stage that precedes dementia. In the same31

5. Trends in Japan’s Life Insurance Industry

Figure 1: Estimated No. of Dementia Patients Aged 65 and Over and EstimatedMorbidity Rate
(Millions of people)
14

(%)
35

12

30

10

25

8

20

6

15

4

10

2

5

0

0
2012

2015

2020

2025

2030

2040

2050

2060

(Fiscal year)
No. of dementia patients aged 65 and over (left scale)Morbidity rate (right scale)month, Taiyo Life launched a new dementia insurance product that provides
benefits for prevention every two years after the first year. The benefits can be paidfor dementia prevention services such as those related to MCI testing costs andphysical therapy sessions that are effective for disease prevention and healthpromotion. In addition, one of the features of the dementia insurance products
launched by Dai-ichi Life in December 2018 is that they cover services forprevention and early detection. These services include a smartphone application thatcan check cognitive functions using eye movements, and home visits by security
personnel to confirm safety in an emergency. Furthermore, in the non-life insurance
market, Tokio Marine & Nichido Fire Insurance Co., Ltd. launched an insurance
product for patients with dementia in October 2018. This product covers searchexpenses and personal liability for dementia patients.
The number of patients with dementia is expected to increase, so the need for
dementia insurance is also expected to increase. Future dementia insurance trends
are of interest because dementia products are becoming more diverse in ways such asoffering support for prevention and early detection in addition to covering
treatment and long-term care costs.

(3) Outlook for Highly Tontine Annuity Insurance
Post-retirement funding needs continue to grow in Japan, where longevity is
still increasing, although average life expectancy is already the highest in the world.
The life insurance industry is therefore focusing on highly tontine annuity insurance(highly tontine annuity insurance is an annuity product to be designed to ensurelarger annuity fund by suppressing death benefit and surrender value.)
The debate about the sale of annuity insurance with highly tontine features has

32

The Toa Reinsurance Company, Limited — Japan’s Insurance Market 2019

been going on for a long time, and the authorities have always taken a cautious stance.
However, sales of this type of annuity product have recently been permitted against
the backdrop of the attention they have drawn in recognition of the fact that the
public pension system, which has been central to post-retirement pensions, will not be
fully able to fulfill its responsibilities to retirees due to factors including the declining
birth rate, the aging of society, and the protracted low interest rate environment.
Annuity insurance products with a low surrender value, such as the “Gran Age”
product that Nippon Life launched in April 2016, suppress surrender value to 70% at
most. These products further enhance the savings function by not attaching death benefits.
These types of product effectively cover longevity risk because they are whole life
annuity (in some products, fixed-term annuity); meanwhile, they provide surrender
values that are less than the paid premiums in the case of midterm cancellation, andbenefits exceed paid premiums when policyholders are in their late 80s.
The reason for the increasing sales of this type of product, which carries thehigh risk of principal loss, is strong need driven by anxiety about the public annuity
system. Consumers will remain interested in products covering longevity risk suchas annuity insurance with highly tontine, and attention is focused on products that
may emerge in the future.

33

Company Overview
ProfileThe Toa Reinsurance Company, Limited (Toa Re), was established in 1940.
With the reinsurance market evolving and clients’ needs expanding, we haverecognized the importance of being able to provide a diverse line of life and non-lifereinsurance products to lead the market as Japan’s primary professional reinsurer.
Toa Re is based in Tokyo with subsidiaries in New Jersey (U.S.A.), Zürich
(Switzerland) and London (U.K.). Increasing demand for reinsurance products in
Asian countries prompted us to expand our operations in those regions and establish
branch offices in Singapore, Kuala Lumpur and Hong Kong.
In acknowledgment of Toa Re’s outstanding financial profile, credit rating
agencies, Standard & Poor’s Financial Services LLC, A.M. Best Company, Inc. andJapan Credit Rating Agency, Ltd., have assigned Toa Re ratings of A+, A andAA+, respectively. As of March 31, 2019, the Toa Re Group boasted total assetsof 694.0 billion yen. Net premiums written during the fiscal year ended March 31,
2019, totaled 248.2 billion yen.

Mission Statement

ToaRe Mission Statement
Providing Peace of Mind
Toa Re aims to realize its mission byworking with society and applying the principles of fairness
and integrity to all aspects of our business
offering long-term, solid support to our clients by supplying
reinsurance products and services that enable themto maintain stable operations
striving to further the interests of our shareholders
and keeping them fully informed at all times
respecting the creativity of our employees and valuing
their contributions
conserving the environment and contributing to
the community

34

The Toa Reinsurance Company, Limited — Japan’s Insurance Market 2019

Consolidated
Financial Highlights

Thousands of
U.S. dollars

Millions of yen
2019

2018

2017

2015

2019

Ordinary income¥266,625¥254,934¥251,462 ¥245,114¥246,264$2,402,243

Net premiums written

248,288237,911

223,749

223,786

208,9622,237,030

Ordinary proﬁt (loss)(7,390)9,857

14,022

9,655

19,112(66,582)

Net income (loss) attributableto owners of the parent(7,150)9,191

10,512

5,674

5,805

(64,420)

Total net assets

179,944

200,550

191,907

180,826

199,334

1,621,263

Total assets

694,088687,950

698,418

688,242689,6316,253,608

2016

For the year ended March 31

As of March 31(Rate: ¥110.99 = US$1)

Net Premiums
Written by Class(Consolidated Basis)(Millions of yen)

Others¥18,088
7.61%

Fire¥65,91227.70%

Fiscal 2017
Life¥78,360
32.94%

Marine¥8,508
3.58%

Total

¥237,911

Personal Accident¥2,2470.94%
Motor¥32,00113.45%

Liability¥32,791
13.78%(Millions of yen)

Others¥18,816
7.58%

Fire¥64,270
25.89%

Fiscal 2018
Life¥88,02735.45%

Liability¥32,12112.94%

Marine¥10,035
4.04%

Total

¥248,288

Personal Accident¥2,7871.12%
Motor¥32,22912.98%

35

Company Overview

Overseas Network

The Toa 21st Century
Reinsurance Co., Ltd.
(Toa Re Europe)

U.K.

Toa Re America(Toronto Branch)●●

Toa Re (Head Office)
● ●

●
●

●

TaiwanHong Kong●●

Singapore
Kuala Lumpur

Toa Re Corporate Member Limited

Locations

Toa Re America(Agricultural Office)

U.S.A.
The Toa Reinsurance Co.
of America (Toa Re America)

Branches
Singapore

50 Raffles Place #26-01, Singapore Land Tower, Singapore 048623
Telephone: +65-6220-0123

Kuala Lumpur

28th Floor, UBN Tower, 10 Jalan P. Ramlee, 50250 Kuala Lumpur, Malaysia
Telephone: +60-3-2732-5911

Hong Kong

Room 801, 8th Floor, Tower 1, Admiralty Centre, 18 Harcourt Road, Hong Kong
Telephone: +852-2865-7581

Subsidiaries

U.S.A.

The Toa Reinsurance Co. of America
177 Madison Avenue, P.O. Box 1930, Morristown, NJ 07962-1930, U.S.A.
Telephone: +1-973-898-9480
The Toa Reinsurance Co. of America (Agricultural Office)18301 Von Karman Avenue, Suite 400, Irvine, CA 92612, U.S.A.
Telephone: +1-949-474-1420

CanadaThe Toa Reinsurance Co. of America (Toronto branch)
55 University Avenue, Suite 1700, P.O. Box 53 Toronto, Ontario, M5J 2H7, Canada
Telephone: +1-416-366-5888

Switzerland

The Toa 21st Century Reinsurance Co., Ltd. (Toa Re Europe)
Seefeldstrasse 5a, 8008 Zürich, Zürich, Schweiz

U.K.

Toa Re Corporate Member Limited
33 Gracechurch Street, London, EC3V 0BT, U.K.
Telephone: +44-20-7082-2591

Representative Offices

36

U.K.

4th Floor of 33 Gracechurch Street, London, EC3V 0BT, U.K.
Telephone: +44-20-7082-2591

U.S.A.

177 Madison Avenue, P.O. Box 1930, Morristown, NJ 07962-1930, U.S.A.
Telephone: +1-973-898-9816

Taiwan4F-2, No. 128, Section 3, Min Sheng East Road, Taipei 10596, Taiwan, R.O.C.
Telephone: +886-2-2715-1015

37

Ratio 5
Solvency Margin Ratio (%)

Ratio 4
Yield on Investments(Realized Gains/Losses) (%)

Ratio 3
Yield on Investments (Income) (%)

Ratio 2
Expense Ratio (%)

Ratio 1
Loss Ratio (%)

Total Assets

Net Profit (Loss) for the Year

Ordinary Profit (Loss)

Underwriting Profit (Loss)

Net Claims Paid

Net Premiums Written

1,512,449
1,500,326
910,965
836,385
47,33584,494
226,476
262,552
171,102198,237
6,977,145
7,098,216
66.2
61.6
31.5
31.3
2.18
2.04
4.34
4.35
723.2
701.1

Fiscal 2018

Fiscal 2017

Fiscal 2018

Fiscal 2017

Fiscal 2018

Fiscal 2017

Fiscal 2018

Fiscal 2017

Fiscal 2018

Fiscal 2017

Fiscal 2018

Fiscal 2017

Fiscal 2018

Fiscal 2017

Fiscal 2018

Fiscal 2017

Fiscal 2018

Fiscal 2017

Fiscal 2018

Fiscal 2017

Fiscal 2018

Fiscal 2017

784.0

688.2

0.76

2.60

2.21

2.22

33.4

33.8

59.2

67.8

3,486,669

3,410,989

15,62037,307

5,616

61,382

4,843

15,555

660,699

770,582

1,222,017

1,233,581

Aioi Nissay
Dowa

MS&AD Holdings
Mitsui
Sumitomo(Non-Consolidated Basis)

827.3

825.4

4.56

4.45

3.16

3.35

30.7

30.6

62.0

68.8

9,669,833

9,393,039

253,895

261,384

325,847

315,370

86,63889,1991,225,285

1,379,707

2,144,780

2,166,627

Tokio Marine& Nichido

1,321.2

1,219.9

1.49

2.02

1.39

1.48

33.5

34.2

59.7

69.5

414,872

396,474

5,346

4,403

7,574

5,069

5,314

1,509

75,18590,161

141,820

143,798

NisshinTokio Marine Holdings

735.1

722.2

2.38

4.13

1.87

2.45

32.3

32.1

64.4

69.8

7,688,176

7,515,887

170,032

175,708

175,220

215,537

94,81541,9901,272,130

1,377,796

2,168,009

2,148,632

Sompo Japan
Nipponkoa

Sompo Holdings

831.5

812.8

2.20

1.70

2.05

1.88

24.8

25.2

70.6

73.8

490,545

505,486

4,987

1,686

5,115

4,088

(1,372)(1,215)131,092

143,824

185,570

194,952

Toa Re(Unit: Millions of yen, %)Sources: Each company’s financial statements of fiscal 2018

Supplemental Data: Results of Japanese Major Non-Life Insurance Companies for Fiscal 2018, Ended March 31, 2019

The Toa Reinsurance Company, Limited
6, Kanda-Surugadai 3-chome, Chiyoda-ku, Tokyo 101-8703, Japanh t t p s : / / ww w.t oare.co.jp

Providing
Peace of Mind
The Toa Re Group is a global composite reinsurer that provides
peace of mind to its clients by protecting them from a broad rangeof perils such as catastrophic earthquakes and typhoons, casualty
events, crop damage, mortality and health care.
We at The Toa Re Group aim to be chosen by clients from acrossthe world because of our ability to offer a secure long-term
partnership of optimal solutions and strong financial security.

www.toare.co.jp

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