HONG KONG--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A+ (Superior) and the issuer credit rating of “aa-” of Meiji Yasuda Life Insurance Company (Meiji Yasuda) (Japan). The outlook for both ratings is stable.
The ratings reflect Meiji Yasuda’s strong risk-adjusted capitalization, adaptive product strategy and established market profile.
Meiji Yasuda’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio, has improved over the past year and remains supportive of the current ratings. The company’s adjusted capital and surplus gained 13% in fiscal year 2013 to JPY 4,098 billion, mainly attributed to the combined result of an increase in unrealized gains in available-for-sale securities and the accumulation of contingency reserves and price fluctuation reserves. The company’s regulatory solvency ratio further improved from 930% at the end of March 2013 to 1,004% at the end of September 2014.
The company took the initiative to limit the sales volume of single-premium individual life products via the bancassurance channel since fiscal year 2012 in order to strengthen its risk management. As a result, the company’s market share in the individual life segment has declined. The company has been proactive in promoting its third-sector products (such as medical and nursing care insurance), which are tailored toward market need. The result is reflected in the improving trend in third-sector new policy annualized premium equivalent over the past three years, albeit the contribution to total new policy annualized premium equivalent is still relatively limited.
On the other hand, by leveraging its established business relationship with governmental offices and regional financial institutions, Meiji Yasuda has consistently maintained the largest improving market share by in-force amount in the group life segment over the past five fiscal years. Going forward, the company will continue to put effort into expanding its cross-selling opportunities of medical and individual life products for group members.
Partially offsetting these positive rating factors are Meiji Yasuda’s exposure to uncertainty in the domestic and global financial markets, continued pressure on mortality profit as the in-force policy amount is declining with the shrinking population and the prolonged low interest rate environment.
While the company’s overall financial strength and profitability are supportive of the current ratings, negative rating actions could occur if the company’s risk-adjusted capital position and/or operating performance deteriorate materially triggered by adverse financial market movement.
The methodology used in determining these interactive ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
• Understanding Universal BCAR
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Evaluating Country Risk
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
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