Best’s Market Segment Report: Japan Life Insurers’ Use of Reinsurance More Than Doubled Since 2020
Japan’s life insurers have increasingly relied on reinsurance in recent years, with the overall cession rate as a percentage of total gross premium written for the segment rising to more than 24% in 2023 and 2024 from just under 10% in 2020, according to a new AM Best report.
According to the new Best’s Special Report, “Japan Life Insurers Increase Use of Reinsurance,” the implementation of an economic value-based solvency regulation framework is driving the increased use of reinsurance. The new solvency regime, which is closely aligned with the Insurance Capital Standard, and known as J-ICS, took effect at the end of March 2026. Under the J-ICS, the new economic value-based solvency ratio will be more sensitive to fluctuations in interest rates, lapses, asset-liability management mismatches and longevity/mortality risks.
“Japanese life insurers have been increasingly using asset-intensive reinsurance to transfer investment, longevity and insurance risks from capital-intensive annuity and long-term life insurance blocks to third-party reinsurers ahead of the implementation of J-ICS,” said Cynthia Ang, senior industry research analyst, AM Best. “The maturity and size of Japan’s life/annuity insurance market make it an attractive opportunity for reinsurers providing asset-intensive reinsurance solutions.”
