Japan P&I Outlook Revised To Positive On Stronger Capital Position; ‘BBB’ Ratings Affirmed

S&P Global Ratings today said it revised to positive from stable its outlooks on its ratings on The Japan Ship Owners’ Mutual Protection & Indemnity Assn. (Japan P&I). At the same time, we affirmed our ‘BBB’ financial strength and long-term issuer credit ratings on Japan P&I.

The outlook revisions are based on our view that Japan P&I will likely continue to strengthen its capital adequacy over the next two years. The insurer has improved profitability through strong underwriting discipline and by increasing premiums at their time of renewal. Japan P&I’s investment income, meanwhile, has benefited from the depreciation of the yen. In fiscal 2023 (ended March 31, 2024), Japan P&I posted net income of ¥6.86 billion, which was higher than we had expected. As a result, the insurer has accumulated a large amount of free reserves (net income plus catastrophe reserves). We expect Japan P&I to maintain robust risk controls for insurance underwriting and investment activities.

The positive outlook reflects our view that Japan P&I will likely strengthen its capital adequacy further within next two years while maintaining a robust operating performance.

We may upgrade Japan P&I if;

• The insurer improves and stabilizes capital above the 99.99% confidence level; or
• It maintains a strong capital buffer at the 99.95% confidence level and solid and stable profitability underpinned by a high-quality customer base.

We may revise the outlook on Japan P&I back to stable if its capital level significantly deteriorates. This could result from unexpectedly large claims.
Ratings Score Snapshot

Financial strength rating: BBB/Positive
Anchor: bbb

Business risk: Satisfactory

• IICRA: Intermediate risk
• Competitive position: Satisfactory

Financial risk: Satisfactory

• Capital and earnings: Strong
• Risk exposure: Moderately high
• Funding structure: Neutral

Modifiers: 0

• Governance: Neutral
• Liquidity: Exceptional
• Comparable ratings analysis: 0

Support: 0

• Group support: 0
• Government support: 0

IICRA–Insurance Industry And Country Risk Assessment.
Source: Platts