KUALA LUMPUR, Jan 24 -- Global credit rating agency AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “aa-” (Superior) of Japan's Nippon Life Insurance Company (Nissay).
Concurrently, the rating agency has affirmed the FSR of A- (Excellent) and Long-Term ICR of “a-” (Excellent) of Nippon Life Insurance Company of America (NLB) (West Des Moines, Iowa, United States).
The outlook of these credit ratings is stable.
In a statement today, AM Best said the ratings of Nissay reflect its strong balance sheet and strong operating performance, favourable business profile, and appropriate enterprise risk management.
"Nissay’s balance sheet strength reflects its risk-adjusted capitalisation at the strongest level, as measured by AM Best’s capital adequacy ratio (BCAR). This assessment is also supported by Nissay's low financial leverage.
"Although the company is exposed to moderate equity risk from its stock investment portfolio, its sizeable available capital and access to debt markets as one of Japan's largest life insurers should allow it to absorb such risk," it said.
Nissay has a market share of 18 per cent in Japan in terms of premium income. The company’s sales representative base remains strong, and it is making efforts to diversify its distribution channels further to achieve revenue growth and strengthen profitability in its domestic market.
Meanwhile, the ratings of NLB also reflect its balance sheet strength which is supported by its risk-adjusted capitalisation at the strongest level, as measured by BCAR, and which is enhanced by a conservative portfolio and strong liquidity measures.
The ratings also took into consideration NLB’s importance to Nissay and the operating support provided by its parent company.
The capital growth lagged premium expansion over the past five years, as net income has remained relatively modest, and the company continued to pay dividends to the parent. However, capital remains more than sufficient to support NLB’s risks.
NLB has reported volatile underwriting results over the past five years. However, results improved in 2018 and 2019, and were especially profitable in 2020 due to the deferral of non-essential care driven by the COVID-19 pandemic.
Underwriting results reverted toward pre-pandemic levels, but remained elevated as utilisation rebounded through three quarters in 2021 due to a combination of higher normal utilisation and COVID-19 testing and treatment.
More details can be obtained at www.ambest.com.
-- BERNAMA
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