The author discusses Tokio Marine Holdings' potential for long-term earnings recovery and its investment strategy as the effects of natural disasters such as torrential rain in Chiba and rising prices continue.
The insurance industry has room to restore long-term profitability by revising premiums and policy terms in anticipation of higher payouts when disasters occur, accurately assessing losses and reflecting them in subsequent pricing. Although natural disasters and rising prices may suppress profits in the short term, observers say that earnings can be stabilised through appropriate risk management.
The author believes that Tokio Marine, as a "long-term investment," should invest capital in highly profitable overseas businesses and entrust them to local managers. If profitability deteriorates because of disasters or inflation, the company should seek recovery by adjusting premiums.
This is not a flashy growth story in which the share price moves sharply over the short term, but the author says it is easy for readers to understand if they are investing on a 3-year, 5-year or 10-year time horizon.