HONG KONG--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “aa-” of The Dai-ichi Life Insurance Company, Limited (DL) (Japan). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect DL’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management.
DL’s balance sheet strength is due in part to its risk-adjusted capitalization being at the strongest level, as measured by Best’s Capital Adequacy Ratio. In addition, financial leverage ratios at its holding company remain conservative, with adjusted debt leverage ratios generally under 25% on a consolidated basis.
DL’s operating performance over the most-recent five-year period consistently have been positive, generating ordinary profits in excess of JPY 250 billion per annum. Additionally, its key operating metrics, which include operating return on assets, also have been relatively stable, owing largely to the large mortality and morbidity gains from DL’s in-force portfolio, as well as stable net investment yields of approximately 2% over the five-year period.
DL is a wholly owned subsidiary of Dai-ichi Life Holdings, Inc., which is one of Japan’s largest life insurance groups in terms of premium income. Through its several insurance subsidiaries, the group maintains a strong competitive market position in Japan. The group also has a growing book of overseas insurance business, which accounts for approximately 40% of its premium revenue.
The stable outlooks reflect AM Best’s expectation that DL will maintain strong and consistent operating performance, supported by an in-force book that is expected to generate favorable returns on embedded value and a stable economic solvency ratio over the medium and long term.
Negative rating actions could occur if there is material deterioration in DL’s risk-adjusted capitalization or sustained deterioration in the company’s operating performance. Additionally, the ratings could be downgraded if a material deterioration in the credit profile of its ultimate parent occurs.
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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