⚠ US Liability Losses and Social InflationModerate threat

Tokio Marine Holdings (8766) — threat to the moat

American juries are raising the cost of liability insurance, and some of Tokio Marine's older policies are paying for it.

Liability insurance in the United States has been hit by rising jury awards and litigation costs, often called social inflation. Tokio Marine's first-quarter results said its Japanese P&C business was behind plan, primarily because of large losses for liability insurance in North America1. In a September 2026 briefing the company said the large first-quarter losses all came from policies written before its underwriting measures2.

Combined ratio, year to March 2026 (%)92.3PHLY87.8TMHCC90.3International (IFRS)95.6Japan P&CTokio Marine results presentation and IR conference, May 2026
The American specialists run better ratios than Japan.

The company's list of business-environment risks includes natural catastrophes, inflation, social inflation, geopolitics and private-credit disruption3. Its American specialty businesses are exposed to the same trend, although their combined ratios have held: PHLY 92.3% and TMHCC 87.8% in the latest year4.

Liability losses often emerge years after the policies were written, so reserves set today can prove too low later.

The company told investors that the underwriting measures it introduced would reduce such large losses by about 70%5. If that is right, the first quarter's losses are the tail of an old book rather than the start of a trend.

The measure is reserve development. Any need to strengthen reserves for older American liability years would show social inflation reaching the books.

References
  1. ReportedTokio Marine's first-quarter results said its Japanese P&C business was behind plan, primarily because of large losses for liability insurance in North America.
    Tokio Marine Holdings, overview of first-quarter FY2026 results - progress against the plan, large losses, the Middle East, strategic equity sales and natural catastrophes. — April-June 2026 · publ. August 2026 · source ↗
  2. ReportedIn a September 2026 briefing the company said the large first-quarter losses all came from policies written before its underwriting measures.
    Tokio Marine Holdings, Tokio Marine Insights: underwriting strategy and capabilities in Japan P&C, 4 September 2026. — September 2026 · publ. 4 September 2026 · source ↗
  3. ReportedThe company's list of business-environment risks includes natural catastrophes, inflation, social inflation, geopolitics and private-credit disruption.
    Tokio Marine Holdings, Group Business Strategy IR conference, 26 May 2026 - Japan P&C: market share, combined ratios, auto insurance, premiums, sales channels and the regulatory orders. — 2016-2026 · publ. 26 May 2026 · source ↗
  4. ReportedIts American specialty businesses are exposed to the same trend, although their combined ratios have held: PHLY 92.3% and TMHCC 87.8% in the latest year.
    Tokio Marine Holdings, FY2025 results and FY2026 projections presentation - international results by business, combined ratios and commercial real estate loans. — FY to March 2026 · publ. May 2026 · source ↗
  5. ReportedThe company told investors that the underwriting measures it introduced would reduce such large losses by about 70%.
    Tokio Marine Holdings, Tokio Marine Insights: underwriting strategy and capabilities in Japan P&C, 4 September 2026. — September 2026 · publ. 4 September 2026 · source ↗
Sources
Generated September 24, 2026