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 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 categorizes as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management.
Meiji Yasuda’s balance sheet strength assessment reflects its risk-adjusted capitalization, which is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Although the high common stock exposure suggests the company’s balance sheet may be exposed to considerable equity price risk, AM Best considers Meiji Yasuda’s relatively large adjusted capital base adequate to absorb this risk.
Meiji Yasuda also has maintained a consistently positive operating performance, supported by stable premium income and strong base profit. In fiscal-year 2018, the company posted a record high base profit of JPY 589.6 billion (USD 5.3 billion) for its domestic life insurance business, driven largely by an increase in interest surplus and expense gains. The company also maintained a stable net investment yield of approximately 2%, even under the ultra-low interest rate environment.
Meiji Yasuda is one of the leading life insurance companies in Japan in terms of annualized net premium and has held a lead position in the group insurance market for a long period of time. While the contribution of its overseas operations to premium income and base profit has grown, it remains relatively modest compared with the company’s domestic operations.
The stable outlooks reflect AM Best’s expectation that Meiji Yasuda will maintain a strong and consistent operating performance, supported by an in-force book of business, which AM Best expects will generate favorable returns on embedded value, and uphold a stable economic solvency ratio over the mid to long term.
Negative rating actions could occur if there is material deterioration in Meiji Yasuda’s risk-adjusted capitalization due to substantial investment losses, or if the company’s operating performance experiences a sustained decline.
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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