Japan's insurers are taking advantage of growth opportunities in international markets, particularly in the United States, Australia and other developed economies to maintain long-term growth and diversify revenue streams, says AM Best.
In a commentary titled “Japan Insurers See Growth Through Reinsurance, Acquisitions”, AM Best attributes the drive overseas to limited growth potential in Japan’s domestic insurance market due to a shrinking and aging population.
“US insurers owned by Japanese companies have seen growth in direct premiums written the last four years, exceeding $68bn in 2024,” said Mr Charles Chiang, senior financial analyst, AM Best. “This trend is likely to continue in light of recent deals such as Meiji Yasuda Life’s acquisition of Legal & General’s US business or Nippon Life’s recently announced acquisition of Resolution Life.”
Japan’s insurance industry is highly consolidated, especially in the non-life segment with a few major companies dominating the market, which limits organic growth opportunities. Additionally, asset-intensive reinsurance (AIR) transactions have been gaining momentum in Japan’s life insurance segment in recent years as companies look to improve capital efficiency and for better interest rate risk management.
“AM Best expects large Japanese insurers to continue seeking growth opportunities overseas, and even in non-insurance areas, supported by their strong capital,” said Chanyoung Lee, director, analytics, AM Best. “Additionally, Japan’s life insurers are likely to expand reinsurance transactions as a long-term capital management strategy, while major non-life insurers also are likely to have more excess capital in the coming years by divesting their strategic equity holdings.”