Sompo International exhibits strong momentum

Bermuda-based Sompo International’s parent company has had its financial strength rating of A+ affirmed by AM Best.

The ratings agency said the outlook for Sompo Japan Insurance was stable.

AM Best said: “SJ’s overseas business, managed by Sompo International Holdings Ltd., the intermediate holding company under SJ, continued to exhibit strong momentum in both net premium written and adjusted profit in fiscal year 2022, driven by positive premium trends and robust investment income.

“AM Best expects that the overseas business will continue to support SJ’s consolidated results over the coming years, driven by improved rate environment in overseas markets and coupled with the strong US dollar against the Japanese Yen that is expected to persist in the medium term.”

Sompo International is led by chairman and chief executive officer James Shea (pictured).

The agency said of SJ’s domestic performance: “SJ has a track record of strong operating performance, mainly supported by its consistent trend of growing premium income and a five-year average return-on-equity ratio of 7.3% (fiscal year 2018 – 2022) on a consolidated basis, as calculated by AM Best.

“Despite an increase in SJ’s combined ratio for its domestic business in fiscal year 2022 mainly due to natural catastrophe events, AM Best expects the prospective underwriting performance of domestic business to be impacted positively by various underwriting initiatives, including shortening the policy duration and rate increases in its fire line.”

Am Best said the ratings of SJ reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management.

“SJ’s balance sheet strength assessment reflects the company’s strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s financial leverage remains conservative with adjusted debt leverage ratios below 25%, although it is higher compared to its domestic non-life peers in Japan.”

AM Best said Sompo Japan has a one-quarter share of Japan’s highly consolidated non-life insurance segment, in terms of net premiums written adding: “In addition, the company has a growing book of overseas insurance business, which accounted for 38% of its NPW and 74% of its adjusted profits in fiscal year 2022.”