HONG KONG–(BUSINESS WIRE)–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 low financial leverage, with an adjusted debt leverage ratio that is well below 25%. The use of sophisticated and transparent economic-based indicators, including the economic solvency ratio and group surplus results, also allow the company to evaluate its risk-taking activities and capital on a timely basis.
Meiji Yasuda’s operating performance has been strong and consistent, supported by a stable premium income and base profit with low volatility in the past. For fiscal-year 2020 (FY2020), the company recorded a stable base profit of JPY 580 billion (USD 5.5 billion) amid the COVID-19 pandemic. While the company’s new sales performance was adversely affected by the sales activities restriction in the first half of FY2020, its annualised premiums from new policies began to recover starting in the second half of FY2020.
Meiji Yasuda is one of the leading life insurance companies in Japan. The company continues to maintain a strong and effective agency channel and aims 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 continues to have modest geographical 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, supported by risk-adjusted capitalisation at the strongest level, as measured by BCAR. Its stable in-force business and diversified portfolio of products also are expected to support the company’s 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. Negative rating actions also could occur if there is material deterioration in operating performance caused by substantial decline in the company’s 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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