Japan:Big 3 non-life insurers command 87% of net premium income

Japan's non-life insurance market is an oligopoly in which the three largest non-life insurance groups, which are MS&AD Insurance Group Holdings, Sompo Holdings and Tokio Marine Holdings.

The trio accounted for JPY7,524bn, or 87% of net premium income which totalled JPY8,609bn in the financial year ended 31 March 2020 (FY2019), written by the 28 GIAJ members as a whole, says Toa Re in a section entitled “Trends in Japan’s Non-Life Insurance Industry “ in the reinsurer's annual report, “Japan’s Insurance Market 2020”.

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 business alliances with local insurance companies and engaging in M&A.

Overall, overseas net premium income has been trending upward with the total for these insurance groups in FY2019 about five times that of FY2010. Overseas business accounted for approximately 21% of net premium income for the three largest non-life insurance groups.

Overseas strategies

The three largest non-life insurance groups have adopted similar strategies in targeting growth opportunities in emerging markets and expanding specialty lines in developed markets. Key overseas business developments of the three largest non-life insurance groups and recent trends are as follows:

MS&AD Holdings is particularly focused on business in Asia. Mitsui Sumitomo Insurance acquired the Asian general insurance operations of UK company Aviva in 2004, and is using its non-life insurance businesses in Asia as its base for advancing into the ASEAN region. It also enhanced its Asian presence by acquiring Singapore insurer First Capital Insurance in December 2017. In other markets, it strengthened its reinsurance business and specialty lines by completing the acquisition of Amlin of the UK in 2016.

Sompo Holdings acquired leading UK specialty (re)insurer Canopius Group in 2014. In addition, it significantly expanded its overseas business in 2017 by completing the acquisition of Endurance Specialty Holdings (now called Sompo International). Also in 2017, Sompo Holdings restructured its overseas business, making Sompo International the core overseas insurance business of the group, and selling all Canopius shares to a private equity investor.

Tokio Marine Holdings has pursued growth opportunities in its overseas business by acquiring businesses in emerging countries, as well as insurance companies with strong specialty lines in developed countries, particularly in Europe and the US, such as Kiln of Lloyd’s in the UK, Philadelphia Consolidated Holding of the US in 2008, Delphi Financial Group of the US in 2012 and specialty insurance group HCC Insurance Holdings of the US in October 2015. Further, in February 2020 it completed the acquisition of Privilege Underwriters, which specialises in the US market for personal insurance and risk management services for high net worth individuals and families. 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.

Consolidated results for the three largest non-life insurance groups benefited from the strong performance of overseas subsidiaries. However, ordinary profits decreased year on year because of the decrease in net income of main non-life insurance companies of each group in Japan.

Source: Asia Insurance Review