Japan Quake May Cost Life Insurers $4.9 Billion, Moody’s Says

Japan’s worst earthquake on record may cause as much as 400 billion yen ($4.9 billion) in claims for life insurance companies, Moody’s Investors Service said.

“Life insurers with exposure to the region will be impacted by increased death claims, higher accident and health benefits, and lower revenues,” Neil Strauss, an analyst for Moody’s, said today in a research report. “Our view is that the companies will sustain moderate, but manageable, levels of losses.”

MetLife Inc. (MET) and Prudential Financial Inc. (PRU), the biggest U.S. life insurers, bought businesses in Japan in the past year to expand in the world’s second-largest market. Hartford Financial Services Group Inc. (HIG), which halted sales in the country in 2009, continues to support existing customers there. In 2009, life insurance sales in Japan were $399 billion, or about 17 percent of the global total, according to Swiss Reinsurance Co.

“The domestic life insurers with greater market share will be more meaningfully impacted than the better-diversified international companies operating in Japan,” Strauss said. “Our current views are based on a baseline scenario that excludes the occurrence of a significant release of radioactive material impacting a broad area of Japan for an extended period of time.”

The 9.0-magnitude temblor and ensuing tsunami on March 11 killed at least 8,450 people, destroyed thousands of buildings and crippled a nuclear power plant, causing radiation leaks.

The disaster probably won’t prompt downgrades to insurer ratings, Strauss said. The low end of Moody’s claims-cost range is 300 billion yen.

To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net;

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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