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 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 mainly reflects its risk-adjusted capitalization being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). This assessment also is supported by a large adjusted capital base, which consists of reported capital, contingency reserves and price fluctuation reserves, as well as some equity credit for subordinated debt. In addition, while balance sheet debt has grown, the company’s financial leverage ratios remain conservative, with adjusted debt leverage ratios generally under 25%.
Meiji Yasuda’s operating performance also has remained consistently positive, generating ordinary profits in excess of JPY 300 billion per annum on a consolidated basis in each of the last five years (fiscal-year ended from 2014-2018). 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 Meiji Yasuda’s in-force portfolio, as well as stable net investment yields of approximately 2% over the five-year period.
Meiji Yasuda is a leading life insurance company in terms of premium income in Japan’s life insurance market. The company also has maintained a leading position in the group insurance market with the largest market share over a long period. More recently, the company has started to diversify its business by expanding overseas, though its geographic diversification remains modest for now.
The stable outlooks reflect AM Best’s expectation that Meiji Yasuda will maintain strong and consistent operating performance, supported by an in-force book that AM Best expects 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 its risk-adjusted capitalization due to substantial investment losses, or if Meiji Yasuda experiences sustained deterioration in its operating performance.
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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