AM Best Affirms Credit Ratings of Dai-ichi Life Insurance Company, Limited

29-Jan-2021 Intellasia | BusinessWire | 10:18 PM Print This Post

HONG KONG--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa-” of Dai-ichi Life Insurance Company, Limited (DL) (Japan), the wholly owned operating subsidiary of Dai-ichi Life Holdings, Inc. (DLH). The outlook of these Credit Ratings (ratings) is stable.


DLH is the ultimate parent for the entire Dai-ichi organisation. In AM Best’s opinion, DL is viewed as integral to the group, given its financial, operational, and strategic importance to the overall organisation. Accordingly, DL’s ratings are based upon the balance sheet fundamentals and organisation operating performance of the DLH organisation, which are then extended specifically to DL.

The ratings reflect DLH’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management.

DLH’s balance sheet strength assessment mainly reflects its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Despite the group’s higher financial leverage compared with other domestic life insurers, its adjusted debt leverage ratios are generally below 25%. In addition, the group continues to have an appropriate asset-liability management strategy to maintain a consistently positive investment spread and manage potential asset-liability mismatch risk.

DLH’s operating performance has been strong and stable, supported by a stable trend of premium income and ordinary profit. Although annualised premiums from new policies of its domestic insurance business declined by 53% in the first half of fiscal-year 2020 due largely to sales activity restrictions, the group’s domestic insurance companies have resumed their sales activities fully since October 2020. Over the near term, the group’s new sales performance is still likely to be impacted negatively by the COVID-19 pandemic and a low foreign interest rate environment. Nevertheless, AM Best expects that the group’s stable in-force book of business will continue to sustain its fundamental profit.

DLH continues to be one of the leading life insurance groups in Japan. In its domestic market, the group continues to diversify its distribution channels by developing different brands (i.e. Dai-ichi Life, Dai-ichi Frontier Life and Neo First Life) to meet different customer needs. The group also continues to seek geographical diversification through the expansion of its overseas insurance business, which currently contributes 25% of the group’s adjusted profit.

The stable outlooks reflect AM Best’s expectation that DLH will maintain its overall balance sheet assessment, supported by its risk-adjusted capitalisation at the strongest level, as measured by BCAR. AM Best expects ongoing strategic initiatives by management to ensure DLH maintains a consistent and strong operating performance over the intermediate term.

Negative rating actions could occur if there is a material deterioration in the group’s risk-adjusted capitalisation caused by substantial investment losses or material decline in ordinary profit.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


Contacts

Charles Chiang
Associate Financial Analyst
+852 2827 3427
[email protected]

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
[email protected]

Jason Shum
Associate Director, Analytics
+852 2827 3424
[email protected]

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644
[email protected]

 

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