AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa-” of Meiji Yasuda Life Insurance Company (Meiji Yasuda) (Japan). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Meiji Yasuda’s balance sheet strength, which AM Best categorises as strongest, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management.
Meiji Yasuda’s balance sheet strength assessment mainly reflects its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). This assessment also is supported by the company’s low financial leverage, with an adjusted debt leverage ratio that is well below 25%. In addition, the company continues to have an appropriate asset-liability management strategy to maintain a positive investment spread and manage potential asset-liability mismatch risk.
Meiji Yasuda’s operating performance has been strong and consistent, supported by a steady trend of increasing premium income and base profit with low volatility in the past. For fiscal-year 2019, the company posted a record high base profit of JPY 636 billion (USD 5.9 billion), mainly driven by an increase in interest surplus. Annualised premiums from new policies declined over the first quarter of fiscal-year 2020, during which Japan declared a state of emergency, although this quickly recovered to 80% of the pre-pandemic level in the second quarter. Over the near term, the company’s new sales performance is still likely to be affected negatively by the COVID-19 pandemic. Nevertheless, AM Best expects that the company’s stable book of in-force business will continue to sustain its base profit.
Meiji Yasuda is one of the leading life insurance companies in Japan. The company continues to maintain a strong and effective agency channel and is trying to diversify its distribution channels further to achieve revenue growth and strengthen profitability in its domestic market. The company’s solid business relationships with regional government offices and private corporations continue to support its position as a market leader in group insurance business. The company has modest diversification with operations in the United States and other Asian countries.
The stable outlooks reflect the expectation that Meiji Yasuda will maintain its overall balance sheet strength assessment, supported by risk-adjusted capitalisation at the strongest level, as measured by BCAR, while ongoing strategic initiatives implemented by management will maintain strong and consistent operating performance over the intermediate term.
Negative rating actions could occur if there is material deterioration in risk-adjusted capitalisation caused by substantial investment losses or material deterioration in its base profit.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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