Japan’s Non-Life Insurers See 228 Billion Yen Profit This Year After Quake

Japan’s three-biggest casualty insurers, including MS&AD Insurance Group Holdings (8725) Inc., forecast 228 billion yen ($2.8 billion) in net income for this fiscal year after posting a decline in profit following the nation’s strongest earthquake in March.

The non-life insurers posted a combined full-year profit of 64.4 billion yen for the year ended March 31 on insurance payments related to the magnitude-9 temblor and valuation losses on their securities holdings. The three companies expect insurance claims that will affect their earnings to total 203.6 billion yen, according to their statements.

While claim losses are limited for Japan’s non-life insurers, which are protected under a government framework that limits coverage, their assets dropped in value as stocks fell following the March 11 disaster. The three insurers posted losses on securities holdings of 65.9 billion yen, 37 percent higher from a year earlier.

MS&AD Insurance Group, Japan’s biggest casualty insurer, expects profit to rise to 67 billion yen for the year through March 2012 from 5.42 billion yen a year earlier. Tokio Marine Holdings Inc. (8766), the second biggest, is forecasting annual profit to more than double to 145 billion yen, while NKSJ Holdings Inc. (8630), the third largest, said it expects to return to profit of 16 billion yen, according to company statements.

Earthquake Insurance

Residential earthquake insurance in Japan is structured so that much of the risk is reinsured to the government. Coverage for nuclear power also comes under the government, shielding local insurers from potential claims from the accident at the Fukushima Dai-Ichi plant that followed the quake and tsunami.

Non-life insurers have set aside reserves for earthquakes that they can tap for claims, according to Japan’s General Insurance Association, while Japan Earthquake Reinsurance will pay all losses amounting to 115 billion yen on residential earthquake insurance, it said.

MS&AD shares rose 1.3 percent to 1,917 yen, Tokio Marine advanced 3.4 percent to 2,271 yen and NKSJ climbed 1 percent to 510 yen at the close of trading in Tokyo today.

The following table shows net income of Japan’s three- biggest casualty insurers for the 12 months ended March 31, as well as their forecasts for this fiscal year. Bloomberg News compiled the figures from their statements released today. All numbers are in millions of yen.

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                     Actual FY 2010 (%)  Forecast FY 2011 (%)
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MS&AD Insurance        5,420    -90.5%    67,000    1136.00%
Tokio Marine          71,924    -44.0%   145,000     101.60%
NKSJ Holdings        -12,918      N/A     16,000       N/A
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Total:                64,426             228,000
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To contact the reporters on this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net; Komaki Ito in Tokyo at kito@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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