Reported losses from Japanese snowstorms in February pass $1 billion

Reported insured losses from February’s severe snowstorms in Japan are rising, with the latest report being a forecast incurred loss of up to $722m from MS&AD Insurance Group Holdings, Inc.

MS&AD Insurance Group Holdings, Inc. reported that losses incurred by its subsidiaries Mitsui Sumitomo Insurance Co., Ltd. and Aioi Nissay Dowa Insurance Co., Ltd. have already hit a reported JPY69 billion ($664m) but are projected to rise to JPY75 billion (just over $722m), once all claims are in.

Last week Artemis reported that Tokio Marine & Nichido Fire Insurance had incurred $310m of losses from the February snowstorms in Japan and that its losses were forecast to increase to as much as $535m.

NKSJ Holdings, Inc. has also reported that the incurred losses of its subsidiaries Sompo Japan Insurance Inc. and NIPPONKOA Insurance Company, Limited have reached JPY16.9 billion ($163m).

With this latest information from MS&AD Insurance Group it seems that the early projections of a total insured loss of up to $600m were underestimating the impact of this snowstorm event, with reported losses now having passed $1 billion.

Reported incurred losses from these three insurance groups, which are the largest three in Japan, now total $1.137 billion. Add up the total using the forecasted figures from MS&AD and Tokio Marine and that could reach an industry insured loss of $1.42 billion of incurred losses or even higher.

The figures are based on incurred losses and do not take into account recoveries from reinsurance protection that the Japanese insurers may have.

The level of losses incurred by MS&AD is approaching where some catastrophe bond triggers are set for Japanese earthquake or typhoon exposures. Perhaps one day we may see insurers look to structures such as cat bonds for indemnification against events such as snowstorms?

At the level of losses currently reported these Japanese insurers will be collecting from reinsurance covers that they have in place. Whether there is any exposure in the ILS or collateralized reinsurance market through participation in the reinsurance programs is uncertain at this time, but some ILS funds definitely allocate capital to Japanese exposures through private deals meaning the sector may face some exposure.