MS&AD Insurance Group's Core Subsidiaries

The stable outlooks on the core operating subsidiaries of MS&AD Insurance Group reflect S&P Global Ratings' expectation that the group will maintain capital adequacy commensurate with our rating. It can do so by accumulating retained earnings and reducing risks by selling strategically-held shares. It also reflects our view that it will retain a solid position in the Japanese non-life insurance market for the next two years. In addition, we believe MS&AD Insurance Group will further diversify earning sources by strengthening its Japanese life insurance business and its overseas business. We may lower our ratings on the group's core operating subsidiaries if we see a high likelihood that, contrary to our expectations, the group's prospective capital will deteriorate significantly and for

...Our base case scenario assumes MS&AD Insurance Group will maintain its very strong competitive position, thanks to its solid presence in the domestic non-life insurance market. The group maintains a leading position in Japan's non-life insurance market, backed by its well-established brand. It also operates in life insurance business, helping to diversify earnings sources. In addition, it has been geographically diversifying earnings through acquisitions and investments. However, its overseas business has yet to fully contribute to overall profit, in our view. We believe natural catastrophes and stock market swings remain the major risks for the group. The growing impact of natural catastrophes in recent years is pushing up reinsurance costs. It will likely take time for the group's steps to raise fire insurance premiums to improve profitability. Also, unrealized gains from its strategic shareholdings still account for a large proportion of its capital, even though it has been selling such...

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