Japan Insurers Seek Growth Abroad As Domestic Market Shrinks - AM Best

KUALA LUMPUR, April 7 (Bernama) -- Japanese insurance companies are increasingly seeking growth overseas as the domestic market faces constraints due to an ageing and shrinking population, according to a new commentary by AM Best.

In its report titled "Japan Insurers See Growth Through Reinsurance, Acquisitions", AM Best noted that insurers in Japan are expanding into international markets, particularly in the United States (US), Australia, and other developed economies, to sustain long-term growth and diversify revenue streams.

AM Best senior financial analyst, Charles Chiang said US insurers owned by Japanese companies have recorded growth in direct premiums written over the past four years, surpassing US$68 billion in 2024. (US$1=RM4.44)

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"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," he said in a statement.

Meanwhile, Best’s director of analytics, Chanyoung Lee said large Japanese insurers are expected to continue seeking overseas expansion, including ventures beyond the insurance sector, backed by their strong capital base.

"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," Lee added.

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Japan’s insurance sector remains highly consolidated, particularly in the non-life segment, with a few major companies dominating the market and limiting organic growth opportunities.

In addition, asset-intensive reinsurance transactions have been gaining traction in the life insurance sector as firms aim to enhance capital efficiency and manage interest rate risks.

-- BERNAMA