Investment income is projected to increase 53.1% this year.
MS&AD Insurance Group is expected to see profit growth moderate over the next few years as the boost from lower catastrophe losses and other favourable factors fades, whilst higher premiums continue to support its domestic business.
Morningstar forecasts MS&AD’s net income to rise 13.8% to $5.0b (JPY787.3b) in fiscal 2026, followed by slower growth of 3.6% to $5.1b (JPY815.9b) in fiscal 2027 and 2.7% to $5.3b (JPY838.2b) in fiscal 2028.
Growth is expected to remain modest through fiscal 2030, with net income forecast to reach $5.5b (JPY878.0b) before falling 2.7% to $5.4b (JPY854.7b) in fiscal 2031.
Premium income is expected to provide steady support.
Net earned premiums are forecast to rise 6.7% to $36.3b (JPY5.76tn) in fiscal 2026 and grow by about 5.5% annually from fiscal 2027 through fiscal 2031.
Total revenue is expected to increase 5.8% in fiscal 2027 and about 5% a year thereafter.
Investment income is also expected to remain a significant contributor, although its growth is forecast to slow sharply after a 53.1% increase in fiscal 2026.
Morningstar expects investment income to rise 7.3% in fiscal 2027 and 3.2% in fiscal 2028, followed by annual growth of around 3% through fiscal 2031.
The outlook comes after MS&AD’s first-quarter adjusted profit reached 38.8% of its full-year forecast, or 47.2% when equity gains are excluded.
Morningstar said the strong result was helped by lower-than-expected catastrophe losses, accounting reversals and favourable market conditions, which are unlikely to continue at the same level.
Overseas operations are expected to remain an important source of growth, but the pace is likely to slow as reinsurance markets soften and catastrophe claims return to more normal levels.
The business has benefited from the consolidation of W.R. Berkley, gains from Asian equity investments and low catastrophe losses.
In Japan, Morningstar expects the property and casualty business to remain supported by its product mix and the delayed benefits of previous premium increases.
However, rising costs remain a concern, with inflation continuing to outpace premium increases in auto insurance.
Morningstar forecasts MS&AD’s return on tangible equity to rise from 16.3% in fiscal 2026 to 18% in fiscal 2027 before gradually easing to 14.1% by fiscal 2031.
($1.00 = JPY159.56)