AM Best Credit Rating of Nippon Life Insurance Company and its subsidiary

HONG KONG–()–AM Great Nippon Life Insurance Company (Nissay) (Japan) has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Credit Rating (ICR) of “aa-” (Superior) ). At the same time, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of Nippon Life Insurance Company of America (NLB) (West Des Moines, Iowa, USA). The outlook for these Credit Ratings (estimates) is stable.

Nissay’s data reflects its strong balance sheet, which AM Best considers the strongest, as well as strong operational performance, good business branding and business risk management.

Nissay’s balance sheet strength analysis shows its capital adequacy ratio at its strongest, as measured by Best’s Capital Adequacy Ratio (BCAR). This assessment is also supported by the company’s low cash flow. Although Nissay is exposed to the same conditions from its stock market, its large available capital, established reputation in Japan and abroad, and good access to credit markets should allow such risks.

Nissay has a track record of consistently strong performance, generally supported by a solid level of operating profit and a five-year average return on equity of 7.2% (annual fiscal year 2017-2021), as calculated based on absolute income. . The company’s performance has remained resilient amid the COVID-19 pandemic and its annual profit has improved from JPY 691 billion to JPY 872 billion for the fiscal year ending 31 March 2022 (FY2021). The company’s payment of benefits was hit hard by a new wave of COVID-19 infections in Japan recently. However, AM Best expects that the impact of claims related to COVID-19 will decrease from October 2022, following the updated guidelines of the Japanese government and the firm’s letter of business pressure , which will continue to support its core earnings over the long term.

Nissay is one of the leading life insurance companies in Japan, with a 19% market share in terms of revenue. The company’s sales force remains strong, and it is trying to expand its distribution channels to achieve revenue growth and strengthen internal profits. its domestic markets. It continues to use geographic maps, with its smaller projects in other Asian and Pacific countries and the United States.

The stable outlook reflects AM Best’s expectation that Nissay will maintain its overall strong balance sheet rating, supported by its negative capitalization. at its strongest, as measured by BCAR. Continued strategic initiatives by management and multiple product lines are expected to support Nissay’s performance over the forecast period.

Disadvantageous results may occur if there is a significant shortfall in Nissay’s capitalization to offset the risks resulting from significant losses. It can also have negative consequences if there is a short-term and long-term disruption in the performance of projects due to a significant decline in operating profit.

NLB’s data reflects its strong balance sheet, which AM Best considers the strongest, as well as its strong performance, limited business information and relevant ERM.

The strength of NLB’s balance sheet is supported by its extremely strong capital letters, as measured by BCAR, its sound financial position and a strong investment portfolio. Capital growth has outpaced the increase in spending over the past five years. Dividend payments increased significantly at the end of the year 2021 and through the third quarter of 2022, causing a decrease in the level of capital in both periods. However, the capital remains more than enough to support the risks of NLB.

NLB has reported steady earnings growth over the past five years, reaching an all-time high in the third quarter of 2022. Claims utilization is lower than expected. it was expected because of the quality of the risk options. In addition, non-essential medical services may have been delayed due to rising costs due to inflation. Good accounting results over the past four years and good investment returns have resulted in continued good operating results.

The company maintains a limited product assortment with a high concentration in the large medical industry and geographic areas in few states. NLB’s lower guidance is driving the price above the market and limited opportunities to book new business, which contributed to the growth of expenses lower than expected and lower prices in the 2021 and through the third quarter of 2022. growing its dental products and vision, as profits tend to be strong.

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