Best’s News & Research Service - January 24, 2024 08:29 AM (EST)
AM Best Affirms Credit Ratings of Meiji Yasuda Life Insurance Company
- January 24, 2024 08:29 AM (EST)
Hong Kong //BestWire// - AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa-” (Superior) 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 assesses 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 robust absolute capital and conservative financial leverage. The company’s use of sophisticated and transparent economic-based indicators, including the economic solvency ratio and group surplus results, also allow it to evaluate its risk-taking activities and capital on a timely basis. While the company continues to be exposed potentially to moderate equity risk from its sizeable domestic strategic stock holdings, it is viewed to have sufficient available capital buffer to absorb such risks.
Meiji Yasuda has demonstrated stable and resilient operating performance, underpinned by its large premium revenue stream and strong base profits that amounted JPY 3.7 trillion (USD 28 billion) and JPY 402 billion (USD 3 billion), respectively, for the fiscal year ended 31 March 2023 (fiscal year 2022). The company has exhibited a track record of stable return on equity (ROE) over the past decade, despite experiencing some decline in ROE in recent years due to the impact of the COVID-19 pandemic and a volatile macroeconomic environment. While fiscal year 2022 saw adverse effects on the company’s base profit due to COVID-19-related losses, there has been improvement during the first half of fiscal year 2023. It is expected that Meiji Yasuda will report an overall improvement in the full fiscal year 2023 compared with fiscal year 2022. Over the long term, AM Best expects the company’s stable in-force business will continue to provide sustainable support to its operating performance.
Meiji Yasuda continues to be one of Japan’s leading life insurance companies. It maintains robust and efficient agency channels and is diversifying its distribution channels further to achieve revenue growth and strengthen its positions in the 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 continues to have modest geographical diversification with operations in the United States and other countries across Asia.
Negative rating actions could occur if there is a material deterioration in Meiji Yasuda’s risk-adjusted capitalisation caused, for example, by substantial increase in investment risk. Negative rating actions also could occur if there is material and prolonged deterioration in the company’s operating performance caused by sustained declining trend in premium income and/or substantial decline in its base profit. Positive rating actions could occur if the company demonstrates sustained improvement in its balance sheet strength metrics although the likelihood of such actions remains limited at this time.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.