Tokio Marine: Incurred losses from Japan snowstorms could hit $535m

by Artemis on March 25, 2014

Japanese insurer Tokio Marine Holdings has reported that subsidiary Tokio Marine & Nichido Fire Insurance has incurred more than $310m of losses from recent snowstorms in Japan and that its incurred losses may increase to as much as $535m.

That is a particularly heavy loss for an insurer to suffer from a snowstorm, demonstrating just how severe February’s event actually was. The level of losses suffered by this one insurer suggest that there will be some reinsurance support for losses from the event, although that is not expected to be too significant at this time.

Tokio Marine & Nichido Fire has already recorded direct incurred losses, so including losses under coinsurance where the insurer is the lead underwriter, of JPY 26.2 billion for fire related losses, JPY 2.9 billion for auto losses and JPY 2.6 billion from other losses, totaling JPY 31.7 billion or approximately USD$310m.

These are preliminary numbers based on information up to the 18th March, the insurer said in an announcement. Tokio Marine said; “Due to further accumulation of the number of reported claims and progress of claims assessment etc., incurred losses on a direct basis (incurred losses including losses of another insurer under coinsurance related to policies for which Tokio Marine & Nichido Fire Insurance is the lead underwriter) at Tokio Marine & Nichido Fire Insurance may increase to about 55 billion yen.”

That would take the insurers total losses from the February snowstorms to $535m, which is a significant single loss event for the firm. The losses from the snowstorm may be reported too late to have any major impact on pricing of Tokio Marine’s Japanese reinsurance renewals in April.

The snowstorms in February are thought to have been the heaviest suffered in 45 years, particularly in the Tokyo region. Impact Forecasting estimated the insured losses from the snowstorms at up to $600m a few weeks ago, that figure may seem a little low if Tokio Marine does indeed see its losses creep up to $500m+.

Japans Nikkei newspaper had reported that total losses from the record snowfall could be around JPY 60 billion (approximately $580m), with JPY 20 billion to JPY 25 billion at NKSJ Holdings, JPY 20 billion at MS&AD Insurance Group, and JPY 15 billion to JPY 20 billion at Tokio Marine Holdings.

It seems likely that the total insurance industry loss from this event will creep well above the $600m mark given the creeping loss total at Tokio Marine & Nichido Fire.

Tokio Marine & Nichido Fire has catastrophe bonds in place for earthquake events which cause it an insured loss of over JPY120 billion. The size of this snowstorm event loss for a single insurer shows that we could see Japanese winter storm becoming a covered peril in the cat bond market in the future.

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