MS&AD Insurance Group recorded consolidated ordinary income of ¥5.91 trillion (around SG$48.6 billion) for the nine months ending December 31, 2025, representing a 12.9% increase from the same period in the previous year, as its Mitsui Sumitomo Insurance unit grappled with regulatory challenges while international operations surged.

Ordinary profit reached ¥886.4 billion, marking a 7.5% rise, while net income attributable to owners increased 5% to ¥657.1 billion.

Mitsui Sumitomo Insurance's ordinary profit declined to ¥515.3 billion, down ¥27.8 billion year-on-year. Net income at the subsidiary fell 10% to ¥382.7 billion.

The underperformance reflects ongoing governance issues at the unit. Japan's Financial Services Agency (FSA) issued business improvement orders to Mitsui Sumitomo Insurance in March for mishandling customer information and in December 2023 for colluding to fix prices in contracts with corporate clients.

MS&AD's chief executive noted that "the most lacking aspect was the ability to anticipate risks," adding that "having two insurance companies of the same size with a dispersed organisational structure is not an optimal state," the publication notes.

Aioi Nissay Dowa Insurance delivered contrasting performance with ordinary profit of ¥173.3 billion, up ¥56.1 billion from the prior year. The subsidiary's net income climbed 26.1% to ¥110 billion. The unit is leveraging its strong relationships with the Toyota Group and the Nippon Life Group, MS&AD says.

Different exposure levels to natural catastrophes including the Noto earthquake, which caused US$2 billion in losses, and the Hyogo hailstorm with US$935 million in damages also contributed to the divergence.

International operations drive profit growth

The international business segment generated net premiums written of ¥1.41 trillion, up 15.3% year-on-year. Ordinary profit in the segment jumped 51.2% to ¥234.8 billion, while net income rose 47.4% to ¥188.6 billion.

Mitsui Sumitomo Aioi Life Insurance reported an ordinary loss of ¥14.9 billion and a net loss of ¥12.8 billion for the period. Mitsui Sumitomo Primary Life Insurance saw ordinary profit decline 29.3% to ¥22.7 billion, with net income dropping 34.1% to ¥13.6 billion.

MS&AD projects full-year ordinary profit of ¥834 billion, down 10.2% from the previous year, with net income forecast at ¥590 billion, a 14.7% decline.

The conservative outlook reflects investment portfolio pressures. Japan's biggest life insurers reported unrealised losses on domestic bond holdings reaching about US$60 billion in total in the fiscal year ended March 2025.

Combined figures from major insurers showed paper losses amounting to around ¥8.5 trillion, approximately four times the total from the previous year, the newspaper adds.

The group is also navigating Japan's transition to new economic-value-based solvency regulations in 2025-2026. Skadden notes that "solvency requirements in Japan can be profoundly affected by fluctuations in interest rates."

MS&AD maintained its dividend forecast of ¥155 per share for fiscal year 2026. The company announced on February 13 that Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance will merge effective April 1, 2027, pending approvals.