International underwriting posted an 88.8% combined ratio.
Tokio Marine Holdings is expected to return to profit growth from fiscal 2027 as higher premiums and continued strength in its international business help offset inflation-related cost pressures in Japan, according to Morningstar.
Morningstar forecasts Tokio Marine’s net income to rise 2.2% to $6.3b (JPY1.00t) in fiscal 2027, following an expected 7.1% decline to $6.2b (JPY980.4b) in fiscal 2026.
Net income is then forecast to increase 5.6% to $6.7b (JPY1.06t) in fiscal 2028 and 7.7% to $7.2b (JPY1.14t) in fiscal 2029.
The insurer’s net earned premiums are expected to grow 4% to $41.1b (JPY6.53t) in fiscal 2026 before increasing by about 5% a year through fiscal 2031. Total revenue is forecast to rise 5.4% to $52.4b (JPY8.32t) in fiscal 2026 and by around 5% annually in the following two years.
Morningstar expects Tokio Marine’s international operations to remain a key source of earnings.
The business recorded a combined ratio of 88.8% in the first quarter of fiscal 2026, supported by underwriting in North American specialty insurance and investment income.
The analyst said these gains more than offset weaker results in Europe and the Middle East.
The domestic property and casualty business is expected to remain under pressure from inflation and catastrophe losses. Its auto and fire insurance combined ratios deteriorated to 97.4% and 93.8%, respectively, in the first quarter as costs increased.
However, Morningstar expects previous premium increases to help offset higher costs and potential catastrophe losses in the remaining quarters.
It forecasts the full-year domestic P&C combined ratio to remain within Tokio Marine’s 91% target.
Investment income is also expected to support earnings. Morningstar forecasts net investment income to decline slightly by 0.9% to $9.0b (JPY1.43t) in fiscal 2026, before rising 4.8% to $9.5b (JPY1.50t) in fiscal 2027 and 6.2% to $10.0b (JPY1.59t) in fiscal 2028.
Adjusted net income is forecast to rise 6.5% to $7.2b (JPY1.14t) in fiscal 2026 and 7.6% to $7.7b (JPY1.23t) in fiscal 2027, although it is expected to fall 3.5% to $7.4b (JPY1.18t) in fiscal 2028. Morningstar also expects adjusted return on equity to remain around 15% through fiscal 2030.
The outlook follows a first quarter in which adjusted net income fell 4% year on year to $1.6b (JPY261b), equivalent to 28% of Tokio Marine’s full-year target.
Morningstar described the results as broadly in line with expectations, with strong international underwriting offsetting weakness in Japan.
($1.00 = JPY159.56)