In this episode of AMBestTV, Jason Shum, associate director, analytics, AM Best, said pressures on the Japan life insurance market, including mortality table updates, low interest rates and the COVID-19 pandemic, were factors in an outlook revision on the market to negative. Click on http://www.ambest.com/v.asp?v=ambjapan520 to view the entire program.
Shum spotlighted the reason for the revised market segment outlook.
"Since the first half of fiscal-year 2019, the situation in Japan’s life market started to change and major players started to see their core profits coming under pressure," said Shum. "There are a few reasons, including premium rate adjustments following the updates of the standard mortality table and interest income that started to come under pressure due to a number of central banks in the world lowering their interest rates."
"The potential impact of the pandemic may go far beyond just death rates. Actually, it can affect other aspects of the insurance business, such as future new business and also potential investment returns."
Looking forward, Shum does see some positive factors for Japan's life insurance market.
"In terms of balance sheet strength, I would say insurance companies are still pretty well-capitalized, and most of the major players still have a large in-force portfolio that can allow them to generate positive core profits in the foreseeable future."
To access the related market segment report, titled, "Market Segment Outlook: Japan Life Insurance," please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=296906.
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