We are pleased to announce our summary of financial statements for the 2025 business year, which covers 1 April 2025 to 31 March 2026.

In the 2025 business year, the Japan P&I Club strategically focused on three key priorities based on our newly formulated medium-term management plan. These priorities were: 1) strengthening our financial base, 2) stabilising the balance of income and expenditure in our insurance business, and 3) enhancing our business competitiveness. These areas were prioritised to meet the objective of obtaining an S&P rating of A- or higher whilst continuing to provide high-quality insurance services to our Members, underpinned by a strong financial foundation and stable operations.

During this business year (“this year under review”), the international economic environment continued to experience high uncertainty due to the worsening situation in Iran and subsequent closure of the Strait of Hormuz, tariff issues initiated by the Trump administration in the United States and various policies significantly affecting marine transportation and supply chains.

In terms of the shipping market, different trends were observed depending on the vessel type. Tanker rates surged in response to the worsening situation in Iran, resulting in a highly volatile and unstable environment. However, for container ships, despite disruptions caused by US tariff policies and the impact of the deteriorating situation in the Middle East, the supply and demand balance was generally maintained.

In these circumstances, thanks to the high-quality ship management of our Members, the Japan P&I Club had no claims exceeding the International Group of P&I Clubs (‘IG’) retention of USD10 million for ocean-going Owners’ entries (‘pool claims’), and no claims exceeding the JPY300 million reinsurance threshold that would be subject to reinsurance for Naiko Class (Japanese coastal vessels) entries.

Meanwhile, in the P&I insurance industry as a whole, the IG saw a significant reduction overall in both the number and amount of pool claims, primarily as a result of low occurrence in the second half of the year.

Under these challenging business conditions, in order to continue providing stable insurance coverage over the long term we focused on stabilising the balance of income and expenditures in our insurance business and building a robust financial structure in this, the first year of our new management plan. As a result of these efforts, the ordinary surplus for this year under review amounted to JPY8.54 billion, an increase of JPY1.57 billion compared to the previous year. As detailed below, we successfully achieved another significant increase in our reserves, which are an indicator of financial soundness, continuing the substantial accumulation from the previous year.

The combined ratio, including foreign exchange fluctuations within the claims reserve, stood at 82.1%. The main financial results are as follows:

Premium Rates
Considering the rising trend in claims payments driven by global inflation and the expectation that reinsurance premiums will remain high due to prolonged geopolitical risks such as the Russian invasion of Ukraine and tensions in the Middle East, continuous efforts to balance insurance income and expenditure are necessary to ensure stable insurance provision over the long term. Accordingly, a general increase of 5% was applied to ocean-going owners’ entries, Charterers' entries and FD&D entries, with 10% to Naiko Class entries for the 2026 policy year.

Regarding our underwriting performance for the 2025 business year, net premiums decreased by JPY2.38 billion to JPY20.21 billion. This was due to insurance income of JPY29.38 billion, a reduction of JPY2.18 billion from the previous business year, while reinsurance premiums increased by JPY190 million to JPY9.16 billion.

Investment Income
Investment income increased by JPY3.81 billion to JPY5.70 billion. This includes interest and dividend income of JPY1.43 billion, a gain of JPY2.27 billion on money held in trust, (representing an increase of JPY1.97 billion from the previous business year) and foreign exchange gains of JPY1.98 billion resulting from the depreciation of the yen. Consequently, ordinary income decreased by JPY70 million to JPY28.98 billion.

Insurance Claims and Operating Expenses
Thanks to our Members' ongoing appropriate vessel management and safe navigation, there were no pool claims exceeding the Club's IG retention for ocean-going owners’ entries, and no claims exceeding JPY300 million for Naiko Class entries (Japanese coastal vessels). Under these circumstances, insurance claims payments decreased by JPY6.37 billion to JPY21.97 billion while reinsurance recoveries decreased by JPY5.18 billion to JPY6.97 billion. As a result, net insurance claims paid decreased by JPY1.19 billion to JPY15.00 billion. Since there was no additional provision for policy reserves, net underwriting expenses decreased by JPY2.41 billion to JPY15.00 billion. Operating expenses increased by JPY750 million to JPY5.00 billion, resulting in ordinary expenses decreasing by JPY1.64 billion to JPY20.44 billion.

Reserves
Consequently, we have significantly increased the reserves, which are an indicator of financial soundness, by JPY7.16 billion from the previous year to JPY48.27 billion, marking another year of substantial accumulation following similar progress the previous year.

Credit Rating
The credit rating from S&P Global Ratings was upgraded to "BBB+" (Outlook: Stable). This upgrade reflects the substantial increase in reserves, positioning the Club's capital level significantly above the 99.99% confidence level in S&P's capital model. By continuing to maintain solid profitability and capital levels while further enhancing our business competitiveness, we expect to achieve a further upgrade in our credit rating.

The income and expenditure account and reserves are summarised below.

Note: The increase/decrease in each account is rounded based on calculations in millions of yen. Therefore, figures may not reconcile exactly.